STI rises 10.06 points to 3,219.53

As the first half of the year comes to a close this Friday, the Straits Times Index yesterday rose 10.06 points to 3,219.53 in a relatively quiet but volatile session, during which it closely tracked swings in the Dow futures.

At 5pm, the latter stood just 18 points weaker after having lost about 50 points a few minutes earlier.

Turnover was an average 1.6 billion units worth $936 million, and excluding warrants there were 197 rises versus 240 falls, so the session was weak.

In the property sector, shares of UOL rose $0.09 to $7.69 on volume of 2.2 million.

The company last week announced an option agreement with Haw Par Corporation under which UOL has a call option and Haw Par has a put option for United Industrial Corporation Limited (UIC) shares, in a proposed transaction that may make UOL one of the largest owners of commercial space in Singapore.

On completion, UOL's stake in UIC will increase from 44.71 to about 48.94 per cent.

Maybank Kim Eng said it sees the deal between related parties as a paper exercise with minimal impact.

"Nonetheless, an eventual control of more than 50 per cent stake in UIC could unlock hidden value within the group and is a catalyst to watch," said the broker.

"We keep our estimates unchanged pending deal completion. Maintain 'buy' with unchanged $9.05 target price (15 per cent discount to revalued net asset value of $10.66). UOL remains our top sector pick."

OCBC Investment Research said the move makes strategic sense.

"More importantly, from our analysis, the transaction will be accretive for UOL, which will deepen its effective ownership stake in desirable UIC assets, such as Singapore Land Tower and Marina Square, that it already understands well," said the broker.

Its fair value for UOL is $8.39.

Among the top actives was printed circuit board firm Jadason Enterprises, whose shares added $0.001 at $0.089 on volume of 15.5 million.

RHB, in a June 27 "buy" report, referred to the company's first quarter turnaround and said it looked forward to a stronger second quarter. "As at 2Q17, utilisation is already at 60+ per cent (same as 4Q16) vs 40+ per cent in 1Q17.

We understand that plans to ramp up for its new mobile product from the US are on track, and the new project would commence in July 2017, with full utilisation expected by end-3Q17," said RHB.

"With projected bumper profits ahead, coupled with positive key macro data on the electronics sector, we maintain our 'buy' call, with an unchanged DCF-derived target price of $0.15..."

Goldman Sachs Asset Management (GSAM) in its June 23 Global Fixed Income Weekly said it has been one year since the United Kingdom voted to leave the European Union, during which time the pound has depreciated almost 15 per cent versus both the US dollar and euro, and the yield on the 10-year UK government bond has fallen 40 basis points.

"We expect UK assets to weaken on uncertainty surrounding Brexit talks and we are underweight UK rates and the pound... We are taking a more conservative view on emerging market currencies because: while the global growth outlook remains positive, we see momentum easing; we suspect positions are somewhat stretched; and commodity prices have weakened," said GSAM.

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