STI falls for fourth straight session

It was a nondescript market trading day, as Singapore shares defied Wall Street's Friday rally to dip lower yesterday, with the Straits Times Index (STI) declining for the fourth consecutive session, this time by 13.85 points or 0.39 per cent to 3,498.29.

Market watchers remarked that the Singapore market appears to be still weak and trading sideways following the correction in late January through early February.

Some buying activity crept back at some points on valuation grounds, but gains were also quickly lost in subsequent days.

Remisier Desmond Leong said that "up moves may not be very strong if the US stock market continues to languish" as it seems to be, with the Dow Jones Industrial Average yet to fully recover from its end-January plunge.

All eyes now seem to be on the Federal Open Market Committee meeting, where the expectation is for a rate increase as officials see better economic growth and an uptick in inflation as justification to continue its interest rate normalisation.

In Singapore, losses were led by Jardine Strategic and Jardine Cycle & Carriage, but also the banks, with DBS Bank down 18 cents or 0.6 per cent to $28.07, OCBC Bank down 12 cents or 0.9 per cent to $13.18; and United Overseas Bank down five cents or 0.2 per cent to $28.10.

All three local banks featured on the list of top 20 losers.

Remisier Charles Chua noted: "The market seems to be waiting for the Fed to decide on which direction it should go - to put the interest rate increase on hold until the next Fed meeting or to go ahead.

"In the interim, the market seems to be going nowhere."

While it is rather the rate-sensitive instruments such as real estate investment trusts (Reits) that should be affected should the Fed decide to raise borrowing rates, a report by DBS Group Research yesterday claiming that Reit prices have bottomed lent the asset class a lift, albeit a slight one.

OPPORTUNITIES

In its report, DBS said: "With the recent correction in share prices for the Singapore Reits, we are sensing that investors are looking for re-entry opportunities.

"Despite the risk of four rate hikes over 2018 (versus consensus estimates of three), we are sensing that investors are tempted to re-enter at lower prices, as yields have inched up by around 50 basis points to 6 per cent, with upside surprise coming from an expected rebound in rental growth rates across most S-Reits."

The FTSE ST Reit index responded by inching up 0.1 per cent to 823.21.

Much of Asia showed the same uninspiring trading pattern yesterday, with key indices in Japan, South Korea, India, Thailand and Indonesia ending the trading day with slight retreats.

Others such as Hong Kong, Shanghai, Shenzhen, Malaysia and Australia reported flat to slight upward moves.

On the local bourse, some 1.6 billion shares worth $939.8 million were traded.

Losers outpaced gainers 307 to 128.

On stocks worth watching going forward, Mr Leong said he is still paying attention to Creative Technology, which after a spectacular seven-fold price surge from $1.25 to $8.75 in a span of about 10 days after unveiling its new audio product, is now also trading sideways, closing 1.1 per cent lower at $6.55 yesterday.

"I don't think at this point in time it is worth seven times more.

"It appears to be speculation-driven for now until the earnings do come in and the fundamentals reflect the price, so the company has to show that it is able to turn the product into actual earnings," he added.

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