Investors take profit after long weekend

RETURNING from the long weekend, Singapore equities had a list of positives to digest. Investors here were buoyed by Monday's record close on Wall Street, concrete progress on the US-China trade front as well as diminishing fears of a no-deal Brexit.

Singapore's Straits Times Index (STI) opened one per cent higher but profit taking after last week's strong performance saw the benchmark close at 3,197.04, an 11.51-point or 0.4 per cent gain. Even though 17 of 30 counters ended in the red, the banks and the Jardine counters ensured the blue-chip stayed in positive territory.

"US-China trade conflict remains a critical near-term narrative for the equity market and with Washington and Beijing coalescing around Phase one of the trade deal, the market has started pricing in bullish expectations around Phase two which is thought to include a complete withdrawal of the proposed December US tariffs," AxiTrader Asia-Pacific market strategist Stephen Innes said.

Markets are also being supported by US corporate earnings as well as optimism that an October rate cut by the US Federal Reserve is a certainty.

That said, sentiment could waver at the end of the week if economic data from the US and China misses expectations, which could contract recent optimism.

In Singapore, trading volume stood at 1.09 billion securities, 91 per cent of the daily average in the first nine months of 2019. Meanwhile, total turnover clocked in at S$1.46 billion, 35 per cent over the January-to-September daily average. Decliners trumped advancers 235 to 178.

Local tech stocks were mostly higher. They were led by AEM Holdings, which added one Singapore cent or 0.7 per cent to S$1.49. It is up 84 per cent this year.

SGX market strategist Geoff Howie said AEM Holdings "has been the strongest performer among Singapore's 50 most traded stocks both in the month of October, and the 2019 year to date". AEM, which provides advanced chip testing solutions, is expected to report third-quarter earnings on Friday.

In a Oct 21 report, CGS-CIMB analyst William Tng said AEM could report a 16 per cent increase in Q3 net profit of S$13.2 million. In a bull case scenario, bottomline could clock in at S$15.7 million, 38 per cent higher than a year ago.

Eagle Hospitality Trust (EHT) staged a comeback, gaining as much as 9 per cent on Tuesday after saying all expenses for the repair work of the Queen Mary will not be borne by the trust, but instead by the sponsor, Urban Commons.

EHT units eventually closed two US cents or 3.7 per cent higher to 56.5 US cents on 29.3 million traded after traders, who were looking to make a quick flip from last week's plunge, cashed out.

The local banks were higher. DBS Group Holdings closed up S$0.19 or 0.8 per cent at S$25.37, OCBC Bank added S$0.03 or 0.3 per cent to S$10.79 while United Overseas Bank fared the best of the trio, closing at S$26.40, advancing S$0.31 or 1.2 per cent.

Elsewhere in the Asia-Pacific, Australia, Japan and Malaysia registered gains. South Korea was mixed while China and Hong Kong closed lower.

In particular, the Shanghai Composite Index fared the worst, dropping 25.87 points or 0.9 per cent to 2,954.18. The index was weighed down by tech suppliers to Huawei after news that the US Federal Communications Commission plans to vote to designate Huawei and ZTE as national security risks.

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