STI on upward trend as shares gain 0.5%

THE rally continues. Taking its cue from Wall Street, which saw solid gains as tech stocks drove the Nasdaq to a fresh record and gains in blue chips lifted the Dow Jones Industrial Average up 0.7 per cent on Monday, share prices in the Singapore bourse also closed higher on Tuesday.

After a 1.2 per cent uptick on Monday, the benchmark Straits Times Index (STI) rose 15.68 points, or 0.45 per cent, to finish at 3,483.16 on Tuesday. Some 1.5 billion shares worth S$1.1 billion were traded. Losers outpaced gainers 206 to 185.

Blue chips that led the performance included DBS Bank, up 32 Singapore cents or 1.1 per cent to S$29.12, OCBC, higher by 11 Singapore cents or 0.9 per cent to S$12.88 and property developer City Developments, which gained 12 Singapore cents or 1.1 per cent to end at S$11.48.

This came as credit ratings agency Moody's maintained its stable outlook on Singapore banks over the next 12 to 18 months, citing the healthy economy and strong bank fundamentals.

"The banking system's strong capital levels, as well as funding and liquidity, indicate that the banks can comfortably support credit growth, which we expect will increase in 2018-19," Eugene Tarzimanov, Moody's vice-president and senior credit officer, said in a statement.

Del Monte Pacific added 1.1 Singapore cents or 6.1 per cent to S$0.19 on news that is it offering up to 587 million existing shares in Del Monte Philippines at 18 pesos to 23 pesos each in an initial public offering. Del Monte Pacific currently owns 100 per cent of Del Monte Philippines, but its stake will drop to 79 per cent post-listing.

According to Bloomberg, the price range values Del Monte Philippines at 16.6 to 21.2 times its estimated 2019 earnings.

Meanwhile, the FTSE ST Oil & Gas Index dipped 0.24 per cent, as the sector anticipates that Opec members will debate on exiting a supply cut agreement at the June 22 meeting, after Saudi Arabia and Russia proposed a revival in oil production.

Hussein Sayed, chief market strategist at FXTM, noted that oil prices have recovered slightly from Monday's fall, but expectations of higher supplies from Opec may continue to weigh on prices.

Brent prices have fallen from a high of US$79.84 on May 23 to US$74.02 on Tuesday.

"Whether the fall in prices is just profit-taking or a change in trend will be determined on June 22 and 23 when Opec members meet in Vienna," he said.

Consumer stocks also saw a boost on Tuesday, after DBS Group Research on Monday flagged it as "the only positive sector in May".

Indeed, last month had seen consumer durables lead sector performances with 3.1 per cent in total returns, trimming its five-month decline to 3.9 per cent. The sector's net institutional inflows of S$106 million also represented a monthly record since SGX Research began reporting these flows in January 2016.

On Tuesday, Genting Singapore rose two Singapore cents or 1.6 per cent to S$1.28, after DBS Group Research recommended "buy" on the counter.

This was despite news that Japan's integrated casino resorts will likely face more delays as the country struggles to overcome challenges such as local opposition, problem-gambling concerns and low unemployment.

ComfortDelGro on Tuesday added four Singapore cents or 1.6 per cent to S$2.51. Credit Suisse late in May had written that industrials have replaced banks as its most preferred sector in Singapore, and this was driven by a more bullish outlook for ComfortDelGro, which it believes may see an earnings per share compound annual growth rate of 6.6 per cent from 2018 to 2020 due to easing taxi competition following the Uber-Grab merger and likely tighter regulations.

Terminal operator HPH Trust also rose half a US cent or 1.8 per cent to US$0.285, while shipbuilder Yangzijiang added one cent or 1 per cent to S$1.02. Both counters are believed to have bottomed out to the point that value has emerged, DBS said in its Monday report.