STI sheds most of earlier gains, Latest Business News - The New Paper

STI sheds most of earlier gains

This article is more than 12 months old

It ends up 0.2%, with AEM Holdings among the most hotly traded counters; experts differ on impact of US elections on Asian markets

Singapore shares ended slightly up yesterday after giving up most of its gains from earlier in the day, as the US midterm elections zoomed into focus.

"As widely expected for the 2018 midterm elections, the Republican Party retained a slim majority of the Senate, and the Democrats regained control of the House after eight years.

"This outcome is seen as neutral for US equity, while the recent rise of US Treasury yields and the US dollar strength are expected to moderate," said United Overseas Bank analysts in a research note.

OCBC Bank economist Alan Lau noted that US President Donald Trump's trade policy towards China may remain unchanged.

Added Mr Lau: "Overall, we are not expecting a major shift in the markets as a result of the midterm elections."

Separately, one dealer noted that investors are now bracing for a period of gridlock in the US.

Closer to home, the benchmark Straits Times Index (STI) surged more than 32 points to hit an intraday high of 3,092.95 as at 9.27am, before finishing the session at 3,065.36, up 0.2 per cent, or 4.74 points.

About 1.57 billion shares worth $1.17 billion changed hands, with 234 counters up and 173 counters down.

Among the most hotly traded counters was AEM Holdings, which rose 11.8 per cent to 94.5 cents, with 37.9 million shares traded. This comes after CGS-CIMB last week upgraded its rating on the counter from "reduce" to "hold", with a target price of 75 cents.

The brokerage believes AEM Holdings is on track to meet its guidance for fiscal 2018 and has a positive long-term outlook.

ComfortDelGro was up 2.6 per cent to $2.36 on the back of news that it is acquiring Buslink, one of Australia's largest privately owned bus businesses, for A$190.9 million (S$190.6 million), in what will be the group's largest acquisition in the country to date.

Also buttressing the index were Yangzijiang Shipbuilding, which gained 4.9 per cent to $1.29, and property counters City Developments (CDL), which rose 2.5 per cent, as well as CapitaLand, which was up 1.3 per cent.

Financials, however, closed mixed with DBS Bank dipping 1 per cent to $23.77, and UOB falling 0.4 per cent to $24.55. OCBC bucked the trend with a 0.2 per cent gain to end at $11.34.

Genting Singapore, which fell 1.6 per cent to 91.5 cents, was the biggest drag on the STI. The counter is expected to announce results today, along with other industry heavyweights including CDL, Singtel, SIA Engineering and Sats.

After posting results that came in largely below expectations on Monday, BreadTalk lost 1.6 per cent to 91 cents.

RHB has maintained a "sell" rating on the counter with a target price of 75 cents, while DBS has a "hold" recommendation with a price target of 98 cents.

On the forex front, observers concurred that risk appetite has recovered this month after an aggressive sell-off last month.

Noted DBS rates strategist Eugene Leow and FX strategist Philip Wee: "Overall, it is too early to believe that the US dollar has reversed its uptrend. The Fed is likely to be encouraged by last Friday's jobs data that US wage growth has finally picked up with a tight labour market. The Fed is likely to reaffirm, at its meeting on Nov 8, its intention to lift its policy rate above 3 per cent over the next year."

The analysts said impact on Asian markets arising from the US elections is "not clear-cut", and it might be better to "focus on domestic fundamentals, valuation and cues from the US dollar to gauge flows".

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