STI posts modest 0.3% gain as caution persists

SINGAPORE - Singapore shares eked out modest gains to start the week amid a mixed showing by regional peers, after the latest data from China

pointed to a deepening slowdown

in the world’s second-largest economy.

The key Straits Times Index (STI) rose 9.85 points, or 0.3 per cent, to 3,149.32 on Monday.

The latest data signalled a slowing in China’s manufacturing and consumer spending, which is hurting the momentum of the nation’s post-pandemic economic recovery despite measures by policymakers to boost liquidity.

Benchmarks in Japan, Taiwan, South Korea and Australia fell, while key gauges in Hong Kong, China and Malaysia rose.

This followed

last Friday’s losses on Wall Street

after a downside surprise in US job additions in June’s data. The latest data has further validated market expectations of a 25 basis-point rate hike at the upcoming United States Federal Reserve meeting.

Attention will be squarely on US consumer price index and producer price index data this week. Traders will scrutinise the impact of higher rates on inflation, and look out for more signs on how the health of the world’s largest economy is faring.

“While a July rate hike is all but baked into the cake, what happens to US interest rates between August and the end of the year is still an open question. As such, inflation gauges are the fulcrum around which market sentiment swings,” said KCM Trade chief market analyst Tim Waterer in a note.

On the home front, turnover came in at 1.4 billion units worth $871.6 million. Gainers outpaced losers with 280 counters up and 237 down.

UOB was unchanged at $27.40. The counter is RHB Research’s only “buy” call in the local banking sector. The house has cut its sector weighting from “overweight” to “neutral”, and expects share prices of Singapore banks to be range-bound in the near term, as investors fret over 2024’s prospects, given expectations of a material slowdown in global economic activity in the later part of 2023.

Frasers Centrepoint Trust slipped 0.5 per cent to $2.13. Maybank Research has upgraded the stock to a “buy” from “hold”, with a target price of $2.35 owing to an attractive valuation, resilient retail sales, a quality portfolio and potential rotation of flows.

In a note released on Monday, Singapore Exchange market strategist Geoff Howie said the STI generated a marginal 1.2 per cent total return in the first half of 2023, with Singapore stocks booking net retail inflow of $1.5 billion, compared with $951 million in first half of 2022.

DBS and UOB booked the most net retail inflow over both first halves. Mr Howie added that between late July and August, close to 400 stocks are expected to report their results for the first half of the 2023 financial year. These will be key in assessing Singapore’s corporate outlook in the second half of 2023.

THE BUSINESS TIMES