Singapore shares close lower amid thin volume

DESPITE Hong Kong re-opening after the Easter Monday holiday, trading in the local stock market on Tuesday remained listless, with the Straits Times Index (STI) drifting 11.21 points lower to 2,819.08. Turnover remained subdued at 1.5 billion units worth S$970 million; in comparison, last Friday's volume was S$1.2 billion. Excluding warrants, there were 181 rises versus 201 falls.

Retail brokers reported only minimal incremental business during the past three to four weeks and that even this has now vanished.

"Plenty of shorting and covering," said a dealer, referring to the events of the past month.

In the second line, shares of plastic injection mould firm Sunningdale Tech, which a month ago traded at S$0.80, rose S$0.005 to S$1.075 on volume of 800,600. CIMB in a March 28 initiated coverage of the stock with a S$1.49 target price based on a price/book of 0.8x.

"Our assumed 20 per cent dividend payout ratio could be conservative, but this is justified by higher capex needs in FY16-17," said CIMB. "The payout ratio could increase past its current expansion phase".

Macquarie Warrants (MW) referred to Macquarie Equities Research's (MER) March 28 report on the Singapore government's Budget 2016 in which it said MER finds little evidence that government spending drives STI earnings.

"Instead, MER finds index earnings growth is most correlated with Non-oil Domestic Exports (NODX), which is outside the government's control, and the strength of the Singapore dollar," said MW.