Positive start to week for STI, Latest Business News - The New Paper

Positive start to week for STI

This article is more than 12 months old

It rides tailwinds of Chinese central bank's rate reform and ends up 13 points or 0.4 per cent

Singapore equities tracked last Friday's Wall Street gains; and like its Asian counterparts, also rode tailwinds from the Chinese central bank's rate reform and positives from the US-China trade front.

The Straits Times Index (STI) got the week off to a positive start, finishing at 3,128.45, up 13.42 points or 0.4 per cent.

Elsewhere in the Asia-Pacific, shares in Australia, China, Hong Kong, Japan and South Korea posted gains. Malaysia bucked the trend, closing lower.

The Hang Seng posted its best session in two months, advancing 2.2 per cent or 557.62 points to 26,291.84.

Last Saturday, the People's Bank of China (PBOC) revealed changes to the way the loan prime rate will be set. Analysts are of the view that the move - aimed at reducing borrowing costs for Chinese companies - supports the slowing economy.

VM Markets managing partner Stephen Innes said: "While not quite the policy bazooka the market desperately needs, still with the PBOC opening the taps to a possible policy cut, it should provide a much-needed boost to regional sentiment and global commodity prices."

Meanwhile, White House chief economic adviser Larry Kudlow said on Sunday recent talks between US and Chinese trade negotiators were positive.

He also eased worries the US economy is heading towards a recession and suggested that Washington may consider recycling receipts collected from Chinese tariffs as income tax cuts.

Oanda's Asia-Pacific senior market analyst Jeffrey Halley noted that the potential of proceeds from duties is "an elegant solution to reducing the pain of tariffs on the American consumer of China".

In Singapore, trading volume clocked in at 1.38 billion securities, 15 per cent more than the daily average in the first seven months of 2019.

Total turnover came to $1.04 billion, just under the January-to-July daily average. Across the market, advancers trumped decliners 252 to 161. The blue-chip index had five of the 30 counters closing in the red.

Yangzijiang Shipbuilding remained the STI's most active counter for a third straight session since trading resumed last Thursday. It gained as much as 7 per cent before settling at $1.01, a two cent or 2 per cent gain.

Last week, retail investors were net buyers of the shipbuilder while institutionals were net sellers. A trader remarked: "Those who picked up the counter on Thursday and flipped them on Monday already made some decent gains."

The local banks ended higher. DBS Group Holdings edged up five cents or 0.2 per cent to $24.75, OCBC Bank added eight cents or 0.8 per cent to $10.71 and United Overseas Bank closed at $25.15, up 11 cents or 0.4 per cent.

Singapore-listed real estate investment trusts (Reits) were mostly higher, with Keppel DC Reit (up seven cents or 4.1 per cent to $1.78) and Mapletree North Asia Commercial Trust (up three cents or 2.3 per cent to $1.36) the best performing.

Morgan Stanley analysts said in a Q2 review of Reits that "rent reversions across office, retail and industrial Reits were broadly positive and improved from the previous quarter, and we think Reit valuations will continue to hold up amid falling bond yields and rising global recession risks".

Among penny stocks, upstream oil services player Rex International jumped one cent or 14.7 per cent to 7.8 cents after its management said it has a war chest of US$70.8 million in cash, cash equivalents and quoted investments as at June 30. The company questioned the market's valuation of its shares and gave a business strategy update that includes plans to further monetise its assets.

Rex shares were also given a boost as oil prices rose for a second day, because of a drone attack on a Saudi Arabian oil field. Fellow oil and gas play GSS Energy closed up 0.4 cent or 5.7 per cent at 7.4 cents.

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