Shares flat, pennies enjoy hectic churning

THE main feature of Monday's session was hectic churning of penny stocks like Noble Group, Cedar Strategic, SunMoon and Ezra that propelled unit turnover to 2.2 billion units, estimated to be the highest in three months.

The Straits Times Index, in the meantime, drifted to a five-point loss at 2,870.24 - a disappointing performance that was wholly expected, given the external uncertainties plaguing the market such as volatile oil prices and the upcoming US presidential election.

Despite the high unit volume, dollar value of business done was a paltry S$631.5 million for an average of just S$0.28 per unit.

Noble Group, whose shares had almost doubled over the past few weeks after a research house said the company was about to sell its US subsidiary Noble Americas Energy Solutions (NAES) for US$1 billion, on Monday duly announced the sale of NAES for US$1.05 billion. Its shares ended S$0.006 higher at S$0.198 on volume of 324 million.

The Singapore Exchange (SGX) despatched two queries around noon on Monday, to Sapphire Corp and Vard Holdings. The former rose S$0.035 or 10.6 per cent to S$0.365 on volume of 18.9 million, while the latter closed S$0.014 or 7.7 per cent higher at S$0.196 with 33.1 million traded. Vard replied shortly after, saying it did not know of reasons why its shares were in play.

Among blue chips, banks had a mixed outing with DBS and UOB slightly weak and OCBC marginally firm.

Maybank Kim Eng in an Oct 7 report on banks looked at Indonesia's tax amnesty programme and maintained its "negative" view of the banking sector, even if its estimated S$37 billion-S$92 billion outflow of deposits may not have a significant impact on the system as it forms only 3 to 8 per cent of system deposits.

"Our bigger concern is Singapore banks will face worsening asset quality and slowing top-line growth. We remain NEGATIVE on the sector. Of the three banks under coverage, we prefer UOB," said the broker.

In the Reits sector, Manulife US Trust or MUST ended US$0.005 lower at US$0.815 on volume of 195,800 units. DBS Vickers (DBSV) said in its Oct 10 "buy" report titled "Wait no longer" that its recent visit to properties in the US and meetings with various property brokers indicate that market fundamentals remain firm.

"We believe that MUST's properties in Midtown Atlanta and Downtown Los Angeles submarkets will continue to see steadily increasing rents, continued expansionary tenant demand, increased employment opportunities and also a lack of competitive new supply," said DBSV. It maintained its target price at US$0.93 based on a discounted cash flow analysis, adding that MUST offers attractive 6.8-7.4 per cent yields for FY16 and FY17.

SGX's investor education portal My Gateway said the 20 largest capitalised stocks in the industrial sector averaged a 4.1 per cent total return in the first week of October, taking their average year-to- date gain to 4.9 per cent. "Last week's biggest gainers within the 20 biggest Industrial stocks were Noble Group, Blue Sky Power Holdings, CITIC Envirotech, United Engineers and Singapore Post. These five stocks averaged a 13.6 per cent gain last week," said My Gateway.

In its outlook for the week, Rabobank said in addition to the earnings season, there is more US data scheduled this week to digest with the main focus on retail sales due on Friday.

"After falling 0.3 per cent month-on- month in August, retail sales growth is expected to recover to 0.6 per cent m/m in September. On Wednesday, the market will be looking for more clues about the timing of a Fed hike in the minutes from the September meeting," said Rabobank.

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