STI rises as Asian markets end mixed, Latest Business News - The New Paper

STI rises as Asian markets end mixed

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Quiet day for investors due to lack of tier-1 data releases

Weak US economic indicators strengthened the case for the US Federal Reserve to reduce borrowing costs, sending Wall Street to post a record performance on Wednesday.

However, its effect was limited on the local benchmark.

The Straits Times Index (STI) finished 4.45 points or 0.1 per cent higher at 3,372.25.

Markets were mixed in Asia-Pacific, with Australia, Japan and South Korea closing higher. Meanwhile, China, Hong Kong and Malaysia ended lower.

IG market strategist Pan Jingyi noted that with the absence of tier-1 data releases yesterday, a relatively quiet day awaited investors.

That said, observers will be looking to the US jobs data release today, where another disappointing round of figures should strengthen the case for an interest rate cut.

Ms Pan noted that according to White House economic Larry Kudlow, trade talks between the US and China could also resume as early as next week.

While this might be viewed as positive, it will have little effect on the markets, which are taking a "once bitten, twice shy" attitude to talks.

In Singapore, trading volume clocked in at 1.29 billion securities, 8 per cent over the daily average in the first five months of 2019. Total turnover came to $936.17 million, 90 per cent of the January-to-May daily average.

The Asian session today might be quieter still, as the US market closed for the Independence Day break.

Across the market, advancers outpaced decliners 245 to 152. Seven of the STI's 30 components finished in the red.

The local banks were mixed. DBS Group Holdings fell nine cents or 0.3 per cent to $26.06, United Overseas Bank was 12 cents or 0.5 per cent lower at $26.47 while OCBC Bank finished at $11.49, edging up one cent or 0.1 per cent.

Real estate investment trusts (Reits) continued to be in fashion despite "expensive" valuations and suppressed yields after market participants took interest in them on expectations of a dovish Fed.

Investor interest was still high, thanks to the prospect that Reits could see the current leverage limit of 45 per cent raised in future, which sent the iEdge S-Reit 20 Index up 0.5 per cent.

A raise in the leverage limit might enable Singapore Reits to better compete against private capital and foreign Reits when making real estate acquisitions.

On 30.8 million shares traded, Genting Singapore was the blue-chip index's most active, closing 0.5 cent or 0.6 per cent lower at 90.5 cents.

The casino operator's shares have fallen 3.2 per cent since a JP Morgan downgrade on Wednesday to "underweight" with a target price of 83 cents.

Among the big gainers on the day was SIA Engineering, which jumped 21 cents or 8.4 per cent to close at $2.72 on four million shares changing hands.

While traders The Business Times contacted were unaware of the reasons for the sudden surge in interest in the counter, one of them pointed out that the company is sitting on a net cash position of $500 million.

Following a more than 8 per cent slide on Wednesday, Sembcorp Marine (SembMarine) shares recovered slightly, up one cent or 0.7 per cent to close at $1.42.

On Wednesday, news broke that Brazilian authorities executed a search warrant for SembMarine Brazilian subsidiary Estaleiro Jurong Aracruz.

A trader told The Business Times that while there is no indication on whether SembMarine's share price has bottomed out, "there are opportunities for investors to buy small amounts of the stock".

Sembcorp Industries, which has a 61 per cent stake in SembMarine, also recovered, adding one cent or 0.4 per cent to $2.42.

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