STI hits highest closing level of 2019

The positive start to the second quarter in equity markets continued to gain steam for investors in Asia.

IG market strategist Pan Jingyi acknowledged that the synchronised manufacturing surprises out of China and the US on Monday drove risk-on sentiment higher.

Growing optimism over US-China trade talks and cheap borrowing costs were also boons to investors as recent worries surrounding slowing global economic growth appear quashed, albeit temporarily.

On the buoyant mood that has greeted the start of the second quarter, FXTM chief market strategist Hussein Sayed noted that investors have "found fresh reasons to continue buying risk assets after a robust first quarter performance".

In Singapore, the Straits Times Index (STI) gained 29.27 points or 0.9 per cent to close at 3,279.78, the highest closing level in 2019.

UOB Kay Hian's vice-president of equities and financial products Brandon Leu said that as the benchmark index "nears its 3,300 resistance, we expect to see some profit taking from here, especially after the recent run up from 3,156".

Australia, South Korea, China, Hong Kong and Malaysia closed higher. Japan crept lower on profit taking by investors.

Trading clocked in at 925.28 million securities, about 67 per cent of the daily average over the first two months of this year.

However, total turnover came to $1.16 billion, 12 per cent over the January-to-February daily average. Advancers outnumbered decliners 227 to 176.

Tritech Group was the bourse's most active with 43.6 million shares traded. Shares in the usually thinly-traded counter ended the session 1.1 cents or 26.2 per cent higher at 5.3 cents with the total value of the trades on the day at $2.2 million.

Despite the high trading volumes over the past three sessions, traders The Business Times spoke to felt that activity was most likely due to speculative actions by investors.

Twenty-three of the STI's 30 constituents ended in the black. Genting Singapore ended one cent or 0.95 per cent up at $1.06 with 34 million shares traded.

Going by value of trades done, DBS Group Holdings saw $150.84 million traded - 13 per cent of the bourse's value of securities traded - across 5.82 million shares. The bank's shares added 48 cents or 1.9 per cent to end at $26.07.

With markets in a buoyant mood, the other local banks also underpinned STI's gains with OCBC Bank closing 14 cents or 1.3 per cent higher at $11.35 while United Overseas Bank added 32 cents or 1.3 per cent to close at $25.74.

Among non-STI counters, Clearbridge Health shares surged 2.1 cents or 14.2 per cent to 16.9 cents following PhillipCapital initiating coverage on it with a "buy" recommendation and a target price of 28 cents.

Despite yesterday's gains, Clearbridge's shares are still down 1.2 per cent this year.

Recent weeks have seen Singapore real estate investment trusts (Reits) rally on being a defensive play and a benefactor of a low interest rate environment, outperforming the STI during the first quarter.

In a research report, Ms Kum Soek Ching, head of South-east Asia and private banking research at Credit Suisse, said: "Even after the strong performance, we believe most S-Reits' valuations can be justified by the lower cost of equity as interest rate falls. Investors may want to add to their positions when there is weakness for better risk-reward."

The bank sees improving demand-supply dynamics in the underlying property markets or overseas acquisitions supporting 1 per cent to 4 per cent distribution per unit growth for S-Reits in the next two years.

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