STI, Catalist index rise to 52-week highs

Noble Group reclaimed top spot in the actives list yesterday with 250 million shares traded, as the rotational playing of penny stocks that started a week ago continued in full force and the FTSE ST Catalist Index jumped 0.6 per cent to a new 52-week high.

This index has now risen 16.2 per cent this year, making it one of the world's best performing indices this year.

The Straits Times Index rose 13.43 points to 3,079.96, also a 52-week high, thanks to gains in the banks - mainly DBS - Singtel and Keppel Corp.

Turnover amounted to 3.1 billion units worth $1.4 billion for an average of $0.45 per unit, and there were 313 rises versus 192 falls excluding warrants.

The Dow futures traded marginally in the black for most of the session, though the move was too small to draw any meaningful conclusions about how Wall Street might perform.

In the earlier part of this week, punting of the penny segment was inspired by Serrano, which jumped on Tuesday and Wednesday from $0.002 to $0.072 in high volume.

Serrano fell back $0.01 to $0.062 with 53.7 million shares traded yesterday, its leadership position assumed by Noble (up 4.5 per cent), Vallianz (up 21 per cent) and International Healthway Corp (up 7.4 per cent).

The Singapore Exchange levied queries on two companies whose shares were actively traded - video specialists Artivision Technologies, whose shares fell $0.001 to $0.03 with 122.7 million done, and IT services provider SinoCloud (formerly Armada Group) after its shares added $0.001 at $0.003 with 106 million traded.

Artivision replied that it did not know of reasons behind the trading, adding that it has not provided information not previously disclosed to writers on investment websites.

Nomura, in its Singapore Banks report, Looking at 4Q for guidance on O&G sector, said although Singapore bank valuations based on price/book value seem cheap, it does not expect them to revert to the 10-year mean.

"This is due to weak net revenue growth prospects, further asset quality deterioration and longer-term elevated credit costs, resulting in a downward trend for ROEs (returns on equity)," said Nomura.

It reiterated its "buy" on DBS with a $20.51 target, is "neutral'' on UOB with a $21.12 target, and called a "reduce" on OCBC with a target price of $8.52.

Bank of America-Merrill Lynch (BoA-ML) in its China Economic Watch said despite a proposal to impose a 45 per cent tariff on China imports during the presidential campaign, it thinks the Trump administration is unlikely to implement a universal tariff, especially not as the first step.

"Such an aggressive stance would likely not be well received by Beijing and in our view would significantly increase the risk of an imminent trade war...'' said BoA-ML.

"However, we believe tariff and non-tariff barriers could be adopted against specific industries, especially in metal and metal products, chemicals, machinery and equipment, and auto parts."

On the subject of potential US interest rate hikes, Macquarie Warrants (MW) said Macquarie Equities Research (MQ) thinks last Friday's US employment report reinforces MQ's conviction in a gradual rate hike cycle.

"MQ's base case remains for two hikes in 2017 (with June and December being the most likely dates). Details suggest little urgency to hike more aggressively in the near term," said MW.

"Given improving domestic demand trends, in MQ's assessment, the balance of risks continues to point towards a greater likelihood of three hikes than one."

This article appears in The Business Times today. For full listings of SGX prices, go to http://btd.sg/BTmkts