Cautious trading ahead of Jackson Hole

MINUTES from the US Federal Reserve's meeting in July may have cast a pall on sentiment from those expecting the US central bank to be outwardly dovish - but its effect was limited in the local market. The Straits Times Index (STI) managed to clock in modest gains to end at 3,127.74, up 5.17 points or 0.2 per cent. It was mixed elsewhere in the Asia-Pacific. Markets in Australia, China, Japan and Malaysia were up, while Hong Kong and South Korea finished lower. Hong Kong's Hang Seng fell 221.32 points or 0.8 per cent as worries remain over the territory's economy after weeks of protests.

VM Markets managing director Stephen Innes observed that the mood in Asian markets was "very capricious" with a "decidedly risk-off note". "This FOMC (Federal Open Market Committee) division is well documented, and while nothing new, it acts as a not-so- subtle reminder of how challenging it could be for chair (Jerome) Powell to meet the market's exceedingly dovish expectations," he added.

After all, the performance of the US economy has continued to be encouraging as evidenced by resilient growth despite global economic headwinds and trade tensions between Washington and Beijing.

With that in mind, attention will now turn to Mr Powell's speech at the central banking meeting in Jackson Hole on Friday, which will be closely scrutinised.

In Singapore, trading volume clocked in at 1.42 billion securities, 18 per cent above the daily average in the first seven months of 2019. Total turnover came to S$955.15 million, 90 per cent of the January-to-July daily average.

Across the market, advancers and decliners were even at 190 each. The blue-chip index fared better, with 11 of the 30 counters closing in the red.

Thai Beverage continued its advance, edging up 0.5 Singapore cent or 0.5 per cent to close at 93 Singapore cents after trading as high as 95.5 Singapore cents. It was the STI's most-traded counter with 49.6 million shares traded.

Having surged 52.5 per cent in 2019, the food and beverage (F&B) player is by far the STI's best performer this year. Wilmar International (up S$0.02 or 0.5 per cent to S$3.83) is a distant second, adding 22.8 per cent in 2019. ThaiBev is also trading above the average target price by analysts of 89 Singapore cents.

Moreover, its run this week was probably given a lift by Wednesday's approval by the Thai cabinet on a 316 billion baht (S$14.2 billion) stimulus package aimed at tackling increasing living costs and the impact of a recent drought amid a slowing economy.

Nomura analysts believe that the package should help in offsetting the impact of downside risks from a weakening economy for retailers and F&B companies, primarily those exposed to small-ticket purchases like ThaiBev.

Yangzijiang Shipbuilding shares continued to see heavy activity since trading resumed last Thursday. Shares in the shipbuilder remain volatile due to ongoing investigations by Chinese authorities of an individual with close links to the firm. They closed 3.5 Singapore cents or 3.6 per cent lower at 93 Singapore cents.

The banks notched up slight gains. DBS Group Holdings closed up one Singapore cent at S$24.59. Meanwhile, OCBC Bank eked out a three Singapore cent or 0.3 per cent gain to S$10.69; and United Overseas Bank ended at S$24.82, up six Singapore cents or 0.2 per cent.

Among second-liner firms, Frencken Group eased three Singapore cents or 4.1 per cent to 70 Singapore cents following a downgrade by KGI Securities on the provider of equipment and integrated manufacturing solutions. KGI head of research Joel Ng said the stock was no longer a bargain following its near 70 per cent rally this year but noted that it is still trading at a discount to peers.

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