Investors book profits after Monday rally, Latest Business News - The New Paper

Investors book profits after Monday rally

This article is more than 12 months old

This comes as fading global outlook is underlined by disappointing economic data from the US and China

Singapore equities had got the week off to a flying start, following a surprise outcome from the Osaka meeting between the US and China.

But Monday's gains were followed by yesterday's flat session, with the Straits Times Index (STI) finishing 1.46 points or 0.04 per cent lower at 3,370.80.

Investors preferred to book profits, as fading global outlook was further underlined by disappointing economic data from the US and China.

A trader said that with companies due to report second-quarter earnings, investors were using the rally as an opportunity to cash out before results are released.

"We are also expecting light trading ahead of the US' July 4 holiday," he added.

IG market strategist Pan Jingyi told The Business Times that in the early session, the STI was "being suppressed on profit-taking and the revival of concerns on trade tensions and their implications on economic performance".

The index entered the mid-day break down 0.5 per cent.

Stocks fared better in the afternoon session, after Australia's central bank lowered interest rates for the second-straight month, bringing rates to a historic low.

Perhaps, it is worth remembering that Monday's rally came at a time when markets are confronted with the reality of a global economic slowdown, with volatility in markets set to continue.

In Singapore, trading volume clocked in at 1.05 billion securities, 88 per cent of the daily average in the first five months of 2019.

Total turnover came to $973.56 million, 93 per cent of the January-to-May daily average.

Across the market, decliners trumped advancers 217 to 174. Fourteen of the STI's 30 components finished in the red.

The local banks closed lower. DBS Group Holdings edged down $0.10 or 0.4 per cent to $26.50; OCBC Bank was $0.05 or 0.4 per cent down at $11.54, while United Overseas Bank finished at $26.55, down $0.06 or 0.2 per cent.

The cyclically-sensitive manufacturing and semiconductor sector, which outperformed the STI on Monday, also ended lower. Venture Corporation shares dropped $0.32 or 1.9 per cent lower at $16.68; Hi-P International lost $0.03 or 2.0 per cent to $1.44 and AEM Holdings was down $0.02 or 1.9 per cent to $1.06.

On Monday, shares in mainboard-listed Indofood Agri Resources had surged 4.5 cents or 16 per cent to 32.5 cents on heavy trading.

The reason for the activity was revealed yesterday through a filing with the Singapore bourse: Substantial shareholder Indofood Sukses Makmur picked up 56.2 million shares from the open market for $18.3 million. As a result of the purchases, Indofood Sukses has raised its stake in Indofood Agri from 74.34 per cent to 78.37 per cent.

Last week, the offer by the maker of Indomie instant noodles to take Indofood Agri private lapsed, with final acceptances not meeting the minimum required amount for the deal to proceed. Indofood Agri closed unchanged yesterday.

Markets were a mixed bag across the Asia-Pacific. Australia, Hong Kong, Japan and Malaysia closed higher, while China and South Korea were lower.

The Hang Seng Index resumed trading, closing at 28,875.56, up 332.94 points or 1.2 per cent, playing catch-up on the global rally while it was away for the observance of the Special Administrative Region Establishment Day. The 22nd anniversary of Hong Kong's return to China in 1997 will mostly be remembered for protesters breaking into the Hong Kong government's legislature building.

Vanguard Markets' managing partner Stephen Innes said: "After Monday's holiday and with the Hang Seng in full catch up mode post-G20, one can only speculate where the markets would be if there wasn't chaos in the street overnight."

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