STI adds 0.5% as trade war spooks ease
Markets are in temporary relief but investors would do well to remain wary as bearish bias remains, say analysts
After two days of bloodletting, Singapore stocks rebounded yesterday as the US dialled back on hawkish rhetoric over a protracted trade war with China.
The local benchmark opened up 0.11 per cent in the morning and climbed during the session to finish at 3,184.69, up 0.45 per cent or 14.22 points. Trading activity picked up in the latter half of the session, with 994.44 million shares worth $1.14 billion changing hands.
On Tuesday, Mr Larry Kudlow, director of the White House National Economic Council, said the US wants to continue trade talks with China and is still planning to host a Chinese delegation for talks next month.
Gainers edged out losers 222 to 203, led by benchmark heavyweights Jardine Strategic Holdings and DBS Group which had recovered from the previous day's bruising.
Jardine Strategic closed 1.39 per cent or US$0.46 (S$0.64) higher at US$33.48, while DBS rose 0.8 per cent or $0.20 to $25.08.
Some of the counters that bled the most included Prudential, which traded down 2.91 per cent or US$0.60 to US$20.
Dairy Farm, a Hong Kong-based retailer, closed lower by 0.99 per cent or US$0.07 at US$7.01. Protests in Hong Kong have yet to see an end in sight, with Beijing warning protesters on Tuesday that "those who play with fire will perish by it", fanning tensions.
Among the most actively traded was Yangzijiang Shipbuilding, whose counter slumped 5.11 per cent or $0.07 to $1.30 on a volume of 51.5 million shares. On Monday, the company posted a net profit of 936 million yuan ($186 million) for the second quarter, down 6 per cent from the same period a year earlier.
But while markets are in temporary relief, investors would do well to remain wary, said analysts.
"The bearish bias remains the case amid the potential for further fallouts," wrote IG strategist Pan Jingyi in a note.
Particularly for Singapore, Credit Suisse's research analysts are also watching out for slowing economic growth and have turned even more cautious on the local market.
"While we were previously cautious, we had expected attractive valuation and dividend yield to provide support to the market," the analysts wrote in a note on Wednesday.
"However, we now expect slowing economic growth to drive deeper earnings cuts, with potential downside risk to dividends as a result."
Credit Suisse chose ComfortDelgro, Wilmar and UOL as its top picks, in line with the more defensive positioning. Its least preferred stocks are Sats, CapitaLand Commercial Trust and Venture. Within banks, Credit Suisse prefers United Overseas Bank to DBS and OCBC Bank.
ComfortDelGro's counter yesterday gained 1.87 per cent or $0.05 to finish at $2.72. News emerged earlier this week that the company is moving into the heavy vehicle leasing business with the addition of five prime movers to its rental fleet.
The five prime movers have been leased out to Haulio, a logistics tech start-up that ComfortDelGro invested in through its US$100 million corporate venture capital fund.
Shares of Wilmar were up 0.76 per cent or $0.03 to $3.98, but UOL was down 0.83 per cent or $0.06 to $7.16.
For full listings of SGX prices, go to https://www2.sgx.com
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