Investors still taking to Reits
CapitaLand posts its biggest intraday gain in two months after news of divestment of malls in China to CRCT
Singapore equities pushed on as risk-on sentiment continued to permeate the market, with interest still in property-related counters, among others.
The Straits Times Index (STI) closed at 3,209.58, up 21.47 points or 0.7 per cent.
US President Donald Trump's threats to raise tariffs on China if he failed to meet his Chinese counterpart at the G-20 summit made little impact in the region's markets.
Investors stayed positive on hopes of a US Federal Reserve rate cut and further stimulus measures by China through infrastructure investments.
Australia, China, Hong Kong, Japan and Malaysia closed higher. The Shanghai Composite Index put in the best performance, gaining 73.59 points or 2.6 per cent to finish at 2,925.72.
Trading volume in Singapore was 964.67 million securities, 80 per cent of the daily average in the first five months of 2019. Total turnover came to $987.59 million, 95 per cent of the January-to-May daily average.
Advancers outpaced decliners 245 to 170. The benchmark index had just three of its 30 components in the red.
Investors have spent the last few sessions taking to real estate investment trusts (Reits) and property counters. Judging by yesterday, little had changed.
IG market strategist Pan Jingyi said: "One should not be too surprised if this trend sustains to the following week, when the Fed is expected to meet and decide on rates.
"The expectation is for the Fed to reflect a more dovish tone in preparation for the need for a Fed cut to come along, and thereby this hope may keep cyclicals supported."
With more participation in real estate and Reit plays, a dealer said investors could look to counters like Bukit Sembawang, Ho Bee Land and Yanlord Land, which have "yet to really participate in the recent rally".
Much of the spotlight was on CapitaLand, which posted its largest intraday gain in more than two months to close 10 cents or 3 per cent up at $3.41.
The developer said it will divest three malls in China to CapitaLand Retail China Trust (CRCT) for 2.96 billion yuan (S$584 million).
CRCT units fell three cents or 1.9 per cent to $1.53.
OCBC Investment Research downgraded the Reit to a "sell", with a fair-value estimate of $1.38, after the market closed.
OCBC analyst Deborah Ong said that while the transaction strengthens CRCT's portfolio by expanding its reach in China and its tenant diversity, the financing plan for the acquisitions remains a concern.
DBS Equity Research was more bullish on CRCT in a separate report released after the market closed. DBS analysts wrote that over time, the Reit "should enhance the visibility of CRCT as an attractive proxy to SGX-listed China-focused Reits among investors". DBS has a "buy" recommendation with a target price of $1.65.
Tech counters continued their ascent. Venture Corp added 41 cents or 2.6 per cent higher at $16.11, AEM Holdings closed at 99 cents, up 4.5 cents or 4.8 per cent. Hi-P International was up six cents or 4.7 per cent to close at $1.35.
Among banks, DBS Group Holdings closed 16 cents or 0.7 per cent higher at $24.68, OCBC Bank added eight cents or 0.8 per cent to $10.81. United Overseas Bank ended at $24.53, climbing 15 cents or 0.6 per cent.
On 46.7 million shares traded, Genting Singapore was the STI's most traded stock, adding 1.5 cent or 1.7 per cent to close at 89.5 cents.
A trader told The Business Times: "The market has been bullish of late, and I expect strength to continue for now. Among STI stocks, Genting Singapore and Keppel Corp currently make good plays, and SIA Engineering would make a good long-term buy."
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