STI ends 0.3% higher, as fears over US debt ceiling crisis ease

SINGAPORE shares finished higher on Thursday (May 18) alongside major regional peers, tracking overnight gains on Wall Street as fears abated over the US debt ceiling crisis with talks progressing.

The key Straits Times Index (STI) inched up 8.71 points or 0.3 per cent to 3,182.55, following gains in US stocks after the Biden administration said that a deal on raising the debt ceiling could be reached as soon as this week.

Key gauges across the region rose, from Japan – a clear outperformer – Hong Kong and Taiwan to China, South Korea, Malaysia and Australia.

“An outright debt default is still a low-probability event, but as we get closer to the ‘X-date’, market nervousness (and vulnerability) are set to rise,” remarked BNY Mellon Investment Management’s head of Asia macro and investment strategy Aninda Mitra.

“There are two games of ‘chicken’ underway. One is between the Democrats and the Republicans. The other is between markets and politicians.

“In the latter, the ultimately high probability of a deal should underpin market resilience. But if markets do not crack, that’ll place less pressure on the politicians to actually resolve underlying issues quickly. That is the irony we face in the current environment, and which raises overall uncertainty,” he added in a note.

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On the home front, 1.4 billion units worth S$1.1 billion were traded. Gainers trumped losers, with 326 counters up and 210 down.

Ever Glory United Holdings : ZKX 0%, a mechanical and electrical engineering-services provider, finished its maiden day on the Catalist at S$0.36 – up S$0.14 or 64 per cent from its issue price of S$0.22.

Apac Realty : CLN 0% inched up S$0.010 or 1.7 per cent to S$0.585. In a Q1 business update last week, the real estate broker reported a 67 per cent drop in net profit to S$3 million year on year.

In a report issued on Thursday, RHB Research maintained its “neutral” call on the counter with a target price of S$0.57, saying that the stock remained well supported on the downside due to its net cash position and healthy yield. The research house expects April’s cooling measures to further dampen resale volume. It added, however, that new sales transactions should go into an uptick in the second half of 2023, supported by more new launches.

Manulife US Reit : BTOU 0% rose US$0.007 or 5.1 per cent to US$0.143. DBS Group Research has maintained a “buy” on the counter, but lowered its 12-month target price to US$0.24 from US$0.45 previously. It cited risks such as higher vacancy amid a potential recession in the US, as well as rising costs and higher interest rates.