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STI posts small rise

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Markets close mixed as US 10-year Treasury yields hit 2-week high and China reports disappointing factory figures

Investors in Singapore and elsewhere in the region had to contend with US 10-year Treasury yields hitting a more than two-week high as well as a disappointing factory reading from China - resulting in a mixed session.

Singapore's Straits Times Index (STI) managed to notch up modest gains after closing flat on Monday. The benchmark index added 9.38 points or 0.3 per cent to finish at 3,155.71 yesterday.

Elsewhere in the Asia-Pacific, Australia, China and Malaysia ended lower. Japan and South Korea were higher while Hong Kong closed flat.

AxiTrader Asia-Pacific market strategist Stephen Innes noted that Wall Street closed flat on Monday but the "conspicuous moves came in bond markets".

On Monday, German Bunds tumbled on word that Germany is considering fiscal stimulus measures to counter an economic slowdown.

This triggered a sell-off in US Treasuries where longer 10-year yields rose more than the shorter dated 2-year ones, which undid the inversion in the yield curve.

Meanwhile, China's August factory deflation falling at its quickest in three years serves as another timely reminder of the effects the trade skirmish is having on its economy.

A higher-than-expected inflation reading for last month is likely to make it slightly harder for Chinese policymakers to justify a cut to the medium-term lending facility next week.

At least markets can take heart that US-China relations have thawed and the two sides will meet again for talks in the US capital next month.

In Singapore, trading volume clocked 927.37 million securities, 78 per cent of the daily average in the first eight months of 2019. Total turnover came to $989.7 million, 92 per cent of the January-to-August daily average.

Across the market, decliners outpaced advancers 210 to 170.

The blue-chip index had 14 of the 30 counters in the red.

Yangzijiang Shipbuilding cleared the one Singdollar mark for the first time in more than a month, climbing three cents or 3.1 per cent to end at $1.01.

It maintained its position on the top step of the STI's most active list with 49.88 million shares changing hands. Institutional interest has picked up after the shipbuilder won contracts for new orders last week.

UOB Kay Hian upgraded Yangzjiang to "Buy" yesterday on "inexpensive valuations" and recent order wins.

The local banks were higher.

DBS Group Holdings advanced 18 cents or 0.7 per cent to $24.95 and OCBC Bank was three cents or 0.3 per cent up at $10.85. United Overseas Bank fared best, closing at $25.77 on a 23 cents or 0.9 per cent rise.

Real estate investment trusts (Reits) were mostly lower with the FTSE Straits Times Reit Index falling 0.7 per cent.

Among them, CapitaLand Commercial Trust (down three cents or 1.4 per cent at $2.12) and CapitaLand Mall Trust (down five cents or 1.9 per cent at $2.64).

On yesterday's performance, CMC Markets analyst Margaret Yang said investors seemed to be "buying banks and dumping Reits as bond yields are surging globally and the treasury yield curve becomes less inverted than a week ago".

"With similar dividend yield, banks seemed to offer better growth prospects than Reits at the moment," she added.

Among secondary stocks, Isetan Singapore surged 46 cents or 9.6 per cent higher at $5.24 in little more than half a session of trading, following news that YTL Starhill Global Reit (SGReit) has made an offer to acquire the Japanese department store operator's share of Wisma Atria.

Trading was halted in the afternoon, before the two parties released a statement after trading hours, clarifying that no deal has been inked yet.

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