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Banking gains push Singapore market cap higher in April

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Total market capitalisation of the 738 companies on the Singapore Exchange rose 2.6 per cent from March to S$1,010.3 billion in April, its first rise after two straight months of decline.

Singapore

LARGE gains in banking stocks pushed total market value of all Singapore stocks higher in April as trade war fears subside.

Total market capitalisation of the 738 companies on the Singapore Exchange rose 2.6 per cent from March to S$1,010.3 billion in April, its first rise after two straight months of decline.

Compared to a year ago, April's market capitalisation jumped 4.8 per cent, according to data compiled by The Business Times. The market cap stood at S$963.8 billion at the end of April 2017.

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Meanwhile, market value of stocks on the benchmark Straits Times Index grew 4.3 per cent month-on-month to S$601.4 billion.

Still, losers on the stock market outnumbered gainers 325 to 245 in April, with technology firm Venture Corporation shedding the most in market value after its earnings missed street estimates.

The group posted a 72.2 per cent growth in net profit for the three months ended March 31 to S$83.7 million, compared to a year ago. Analysts had hoped for net profit to hit S$91 million in the first quarter.

Revenue rose 1.5 per cent to S$856 million. In US dollar terms, revenue for the first quarter would have grown by 9.1 per cent, Venture said.

Another technology stock, Hi-P International, a components supplier for Apple and Amazon, also slid in the month, losing S$567.8 million in market value.

Among the top 10 losers for the month are ST Engineering, City Developments Limited (CDL), Sembcorp Marine, Olam International and Best World.

Some of these, such as CDL, Venture and Hi-P, have come down after a strong rally in 2017, noted Carmen Lee, head of OCBC Investment Research. The brokerage has a "buy" call on CDL, ST Engineering and Venture.

"In the short- to medium-term, there is still uncertainty in the market, especially in view of the trade tensions," she said. "For longer-term investors, price corrections are opportune time to slowly accumulate these stocks."

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On the other hand, DBS, UOB and OCBC Bank were the biggest gainers in April.

The local banks have benefited from several favourable factors, including a re-rating of Asian banks, better earnings outlook, higher interest rates and therefore better margins, and growing wealth businesses, said Ms Lee.

At the same time, "the high allowances of the last two to three years seemed to have reached a trough too", she noted. DBS results, released on Monday, were above market expectations and fuelled an uptick in banking stocks. UOB is expected to announce its earnings on Thursday and OCBC on May 7.

CGS-CIMB Research head of Singapore research Lim Siew Khee said that based on the earnings that have been announced so far, "it is quite obvious that banks is an 'Overweight', supported by net interest margin expansion and generally positive overall business sentiment". The brokerage's preferred banking stock is DBS.

For the technology sector, although earnings growth is positive, investors are spooked by growth tapering off and single customer risk, she said, advising investors to stick to big names like Venture Corp.

In the capital goods sector, earnings for Keppel Corporation and Sembcorp Marine, and potentially Sembcorp Industries, have not been good, but the oil price is high enough to sustain investors' interest, said Ms Lim.