Bank, property stocks lead STI rebound

The Straits Times Index (STI) yesterday rebounded from Wednesday's 28-point loss by 13.78 points to 3,215.55, led mainly by banks, property counters, Jardine Matheson and Hongkong Land.

Turnover was an average 2.1 billion units worth $1.04 billion; and excluding warrants, there were 218 rises versus 218 falls so trading was much more mixed than the index's reading might suggest.

"Stuck in a trading range" appears to be the best way to describe the index's movements over the past fortnight.

US interest rate hikes, weak oil prices and political upheaval in the US and UK have threatened to bring the sellers out in force, yet stocks have remained relatively firm, most probably as investors buy into the belief that a synchronised global recovery is underway.

Banks have been the main index movers throughout the past year and yesterday was no different. UOB and OCBC stood out with their rises, though DBS managed a modest $0.04 gain at $20.44 with 3 million done.

Macquarie Warrants (MW) in its daily newsletter said that Macquarie Equities Research, or MQ, held its 8th annual Asean Banks Tour last week, and met management teams and regulators across five countries over five days.

"The meetings reinforced MQ's view that Asean contains some of the more exciting investment opportunities within the regional financials sector," said MW.

"Among MQ's top picks by country is DBS. MQ has an outperform rating on the Singapore bank with a 12-month target price of $22.20."

In the property sector, City Developments stood out with a $0.27 or 2.5 per cent jump to $10.92 on volume of 3.1 million.

The sector has been firm of late on privatisation speculation surrounding stocks connected to UOB, particularly UIC.

Elsewhere among blue chips, shares of media and property firm Singapore Press Holdings (SPH) ended $0.02 weaker at $3.20 on volume of 4.5 million.

The company announced that together with its joint venture partner Kajima, it has been awarded the HDB tender for a 99-year leasehold site at Upper Serangoon Road at the Bidadari Estate. The consortium's bid was $1.132 billion.

OCBC Investment Research said that, while the sum was deemed to be bullish by the market, it notes that it was only 1.1 per cent higher than the second highest bidder and so believes that the project is likely to be accretive, particularly given improved sentiments in the domestic residential sector.

"Given the uncertain economic outlook and the continuing disruption of the media industry, we expect conditions to remain challenging for the group's media business," said the broker.

"We update our model with the latest acquisition and weaker media assumptions, and our fair value estimate slips further to $3.34. Maintain hold."

Phillip Capital, in its technical analysis of the STI, said that the current outlook is bearish.

"Price is testing a critical area at the confluence of 3,188 range low and 60-day moving average which has been holding price up for the past seven weeks," it said. "Watch this support area closely as the break below it would cause the next wave of selling to take place where sellers aim for the 3,158 support area followed by 3,112."

Maybank Kim Eng, in its latest market view, said: "The market is expected to bounce around as oil prices slumped to a 10-month low on growing worries of excess crude supply, though property counters will be supported by possible privatisation of UIC."

It set immediate support for the index at 3,190 and overhead resistance at 3,268.

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