STI rebounds after Monday sell-off, Latest Business News - The New Paper

STI rebounds after Monday sell-off

This article is more than 12 months old

Asian markets also lifted by news that China's Vice-Premier will head to US for trade talks

Knee-jerk reactions by investors are often followed by a market recovery the next day, with yesterday's session in Singapore being no different.

The local market was pummelled on Monday after US President Donald Trump said he would raise tariffs on Chinese goods.

Even though market watchers said that the local market was not oversold, Singapore's Straits Times Index (STI) fell by more than three times its average daily range of around 30 points.

This led remisier Ernest Lim to say that the "knee-jerk reaction was larger than expected".

Markets in Asia were also given a lift yesterday by news that Chinese Vice-Premier Liu He will go ahead with a visit to the US tomorrow for trade talks.

The efforts towards reaching a trade deal had been cast in doubt after Mr Trump's move to impose new tariffs on Chinese imports.

The STI overturned some of Monday's 3 per cent slide to close at 3,312.52 yesterday, up 21.90 points or 0.67 per cent.

Markets in Australia, China, Hong Kong and Malaysia closed higher. Meanwhile, both South Korea and Japan, which were closed on Monday, ended lower.

Trading on the Singapore bourse clocked in at 1.05 billion securities, 83 per cent of the daily average over the first three months of 2019.

Total turnover came to $1.15 billion, 12 per cent more than the January-to-March daily average.

Across the market, advancers outpaced decliners 279 to 142.

Global Invacom Group (GInva) was the Singapore bourse's most traded on the day. The satellite communications equipment provider surged by as much as 16 per cent during early trading before the company said it was awarded US$6 million in contracts to supply direct-to-home satellite units.

GInva eventually closed at 8.5 cents, up 2.3 cents or 37.1 per cent, with 50 million shares traded. Its stock is up by almost 1.5 times this year.

The benchmark index saw 27 of its 30 components closing in the black.

Among them, Genting Singapore was the blue-chip index's most traded, closing flat at 95 cents with 33 million shares changing hands.

The casino operator is due to release its first-quarter earnings tomorrow after market close.

The local banks, all of which saw their shares drop by more than 3.9 per cent on Monday, made up for some of those losses.

DBS Group Holdings closed 24 cents or 0.9 per cent higher at $26.77; OCBC Bank advanced eight cents or 0.7 per cent higher at $11.57; and United Overseas Bank (UOB) added 15 cents or 0.6 per cent up at $26.

OCBC Investment Research's head of research Carmen Lee said that following Monday's session, DBS and UOB stocks "have already corrected sharply and are now below our recommended re-entry price levels".

Meanwhile, Mr Lim suggested to his clients to consider picking up OCBC's shares following Monday's dip, with the bank due to release earnings on Friday.

Defensives such as utilities and telecommunications were among the other big gainers on the day.

China Everbright Water shares gained two cents or 4.8 per cent to end at 43.5 cents, while telco Singtel advanced six cents or 1.9 per cent to close at $3.16.

IG market strategist Pan Jingyi told The Business Times that due to uncertainties revolving around the outcome of trade talks, "it would not be surprising if investor interest in such sectors continues this week".

Perhaps, investors should stay cautious as some degree of uncertainty still remains.

As a trader put it: "If you must, nibble but not gobble up stocks after Monday's sell-off, otherwise, it would not hurt much to stay on the sidelines."

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