STI ends flat, dragged by heavy­weights

The New Paper - - BUSINESS - CLAIRE HUANG, THE BUSI­NESS TIMES

Ex­pected NODX re­bound in Oc­to­ber fig­ures fails to lift sen­ti­ment on a day of mixed trad­ing

Sin­ga­pore eq­ui­ties strug­gled most of yes­ter­day to climb new highs de­spite a strong earn­ings sea­son. They fin­ished about where they started.

The bench­mark Straits Times In­dex (STI) lost 0.97 points or 0.03 per cent to end flat at 3,419.13, dragged by shares of in­dex heavy­weights DBS, Sing­tel and Hongkong Land.

DBS alone lost over 5 in­dex points, clos­ing at $23.75, down 26 cents — a sign of cor­rec­tion.

Turnover came in at 2.2 bil­lion worth $1.2 bil­lion. Ex­clud­ing war­rants, gain­ers trumped losers 251 to 217.

Even an ex­pected re­bound in Sin­ga­pore’s non-oil do­mes­tic ex­port (NODX) growth in the Oc­to­ber trade fig­ures due on Fri­day failed to lift sen­ti­ment.

Ms Rad­hika Rao, an econo- mist at DBS Group Re­search, said: “The head­line num­ber is ex­pected to reg­is­ter 8 per cent year-on-year amid a re­sump­tion in the elec­tron­ics rally and a re­bound in bio­med­i­cal ex­port sales af­ter the in­dus­try-spe­cific plant shut­down last month.”

Cosco Ship­ping In­ter­na­tional’s counter was among those that made it to the day’s most ac­tive list, with over 81 mil­lion units chang­ing hands. The stock of the com­pany, which ear­lier this month made a $488 mil­lion cash takeover bid for Co­gent Hold­ings, closed 10.5 Sin­ga­pore cents higher to $0.545.

Com­fortDelGro’s shares jumped 5 per cent, adding 10 Sin­ga­pore cents to end at $2.10 on a vol­ume of 18.5 mil­lion. Last Fri­day, the trans­porta­tion gi­ant said its net profit fell 8.2 per cent to $80.1 mil­lion for the third quar­ter, with the core taxi busi­ness dented by pri­vate-hire com­pe­ti­tion.

OCBC In­vest­ment Re­search main­tained its ‘hold’ call on the stock with a lower tar­get price of $2.05, say­ing it ex­pects the taxi mar­gin to de­cline grad­u­ally due to the strong com­pe­ti­tion from Grab.

Still, bro­kers have raised Com­fortDelgro’s FY17F/18F Patmi fore­cast though they low­ered the earn­ings be­fore in­ter­est and tax (Ebit) mar­gins as­sump­tions for taxi busi­ness and bus busi­ness be­yond FY18F.

Across the re­gion, prof­ittak­ing took place in Tokyo’s stock ex­change on the back of US tax re­form jit­ters, while Hong Kong’s Hang Seng closed up, led by China’s an­nounce­ment last week that it was lift­ing lim­its on for­eign own­er­ship in the fi­nan­cial sec­tor. Korean, Aus­tralian and Malaysian shares fell, while New Zealand eq­ui­ties rose.

Gold­man Sachs As­set Man­age­ment said US tax re­form re­mains in fo­cus although the tim­ing and scope of pol­icy changes re­main un­cer­tain — es­pe­cially af­ter the Sen­ate Repub­li­cans re­leased their ver­sion of a bill which con­tains key dif­fer­ences from the House ver­sion re­leased last week, in­clud­ing de­lay­ing a cor­po­rate tax rate cut by one year to 2019.

“From a macro per­spec­tive, we think the key con­sid­er­a­tion is the ex­tent to which tax changes will widen the deficit. At the mi­cro level, we see po­ten­tially off­set­ting im­pacts, though a cor­po­rate tax rate cut will likely serve as a cash flow tail­wind,” Gold­man Sachs said.

Mean­while, in­com­ing US Fed­eral Re­serve chair­man Jerome Pow­ell will have his plate full when he takes over from Janet Yellen.

Mr Erik Weis­man, chief econ­o­mist at MFS In­vest­ment Man­age­ment, said: “US and global growth rates have risen above po­ten­tial, do­mes­tic and in­ter­na­tional labour slack con­tin­ues to de­cline rapidly, but wage and con­sumer in­fla­tion re­main qui­es­cent. Cer­tainly, this con­stel­la­tion of macroe­co­nomic dy­nam­ics is much pre­ferred to a world with weak growth and de­clin­ing rates of in­fla­tion.”

Mr Weis­man be­lieves Mr Pow­ell is likely to tighten mon­e­tary pol­icy grad­u­ally, “let­ting the US econ­omy run above po­ten­tial un­til he ac­tu­ally sees de­mand-push in­fla­tion”.

This ar­ti­cle ap­pears in The Busi­ness Times to­day. For full list­ings of SGX prices, go to http://btd.sg/BTmkts

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