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Low inflation data gives STI a bounce

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Core inflation also eases, raising hopes Singapore's central bank will ease monetary policy in October

Singapore stocks bounced back from the previous day's decline after official data showed inflation rates eased in June, strengthening economists' expectations of monetary easing ahead.

The Straits Times Index (STI) rose 0.47 per cent or 15.91 points to close at 3,373.13.

Gainers outpaced losers 266 to 194. The session saw 1.34 billion shares worth $917.93 million changing hands.

Yesterday, consumer price index (CPI) figures released by the Department of Statistics showed Singapore's headline inflation eased in June, ending a four-month streak of edging upwards.

Core inflation also continued to ease, raising hopes of an easing monetary policy by Singapore's central bank in October.

For the rest of the year, external sources of inflation "are likely to be benign", the Monetary Authority of Singapore and the Ministry of Trade and Industry said.

At home, labour market conditions have largely held up and will support moderate wage increases, but an acceleration in inflationary pressures is unlikely given Singapore's slower economic growth, global uncertainties and the continuing restraining effects of monetary policy tightening in 2018.

The STI resumed yesterday's afternoon session at 3,366.95, up 0.29 per cent, and did not venture into negative territory for the rest of the day.

Shares of industrial conglomerate Jardine Matheson Holdings (JMH) and electronic services provider Venture Corporation were among the top performers. JMH closed up 0.22 per cent or 14 US cents at US$64.31, while Venture ended higher by 1.62 per cent or 25 Singapore cents to $15.67.

Venture said in an exchange filing yesterday evening that asset manager BlackRock Inc is now deemed a substantial shareholder of the company, after BlackRock's related entity, PNC Financial Services Group, became a substantial shareholder through a share purchase last Friday.

PNC acquired about 525,400 Venture shares on Friday, increasing its shareholding to 5.16 per cent.

In a July 19 report, Maybank Kim Eng analysts maintained their "buy" call on Venture, noting that the firm is a beneficiary of the US-China trade war, as around 85 per cent of its production is outside China. "New customers won as a result of the trade war should contribute more meaningfully in the next 1-2 years as time is needed to launch new products," they wrote.

However, Venture may see a Q2 earnings miss amid customers' product transitions, Kim Eng said. "A potential share price fall may provide an even more attractive entry."

Singapore real estate investment trusts (Reits) were a mixed bag.

Capitaland Mall Trust, trading cum dividend, was up 1.54 per cent or four Singapore cents at $2.64, after raising its second-quarter distribution per unit (DPU) by 3.9 per cent to 2.92 Singapore cents, from 2.81 cents a year ago.

The trust's performance reflects "a mixed retail climate, where positive reversions and higher traffic imply Jewel's impact has not been as negative as expected," according to Citi Research analyst Brandon Lee. "But higher opex and weaker sales suggest competition for tenants remains high."

On the other hand, ESR Reit was unchanged at $0.535 yesterday despite also trading cum dividend. Its DPU was stable at 1.004 Singapore cents for its second quarter, up just 0.3 per cent from 1.001 cents a year ago.

Frasers Commercial Trust, which will pay out a DPU of 2.4 Singapore cents for the third quarter that is flat on the year before, also closed unchanged at$1.64.

For full listings of SGX prices, go to https://www2.sgx.com