Global equities buck October effect; STI posts 4% gain: SGX

EQUITY benchmarks across most countries bucked the "October effect" last month, with the Straits Times Index (STI) even posting a 4 per cent monthly gain, according to a research note by the Singapore Exchange (SGX) on Monday.

With the resumption of trading after a week-long national holiday in China, and the announcement of a tentative agreement for the "first phase" of a trade deal between US and China, October saw investors rotate from treasuries to equities, with emerging markets benefiting from a decline in the US dollar, SGX said.

"Once the China stock market reopened, its local markets had time to digest its positive manufacturing gauges for the month of September."

Another bright spot for the markets was US President Donald Trump's announcement of a possible trade deal with China, which led the 10-year US Treasury yields to bounce from 1.5 per cent lows in the first week of October, to end the month at 1.69 per cent.

This also saw the trade-weighted US dollar index decline 2 per cent, and the FTSE All World Index gain 5 per cent over the same three weeks, the Singapore bourse noted.

Closer to home, the STI saw a 5 per cent rebound from its October intra-month low of 3,071.54 to close the month at 3,229.8.

Overall, the STI gained 4 per cent in October, taking its 10-month total return to 9 per cent, in line with its 10-year average annualised total return.

This was on a par with the 4 per cent return by Japan's Nikkei 225, while Taiwan's technology-laden Taiex led the region with a 5 per cent gain for the month.

Aside from the broad market drivers, gains by Asia-Pacific's largest capitalised hi-tech hardware stocks in October also coincided with 5G rollouts ahead of schedule globally.

In particular, significant gains were observed with stocks in Singapore that have exposure to either semiconductors, or their related products in consumer electronics, SGX noted.

AEM Holdings gained 33 per cent, Hi-P International rose 27 per cent, and UMS Holdings jumped 34 per cent in October.

According to the Singapore bourse, substantial shareholder filings also show that over recent weeks, UBS Group AG and Morgan Stanley have increased their deemed interests in AEM back above the 5 per cent threshold.

Separately, banking stocks were among Singapore's 50 most traded stocks in October ranked by turnover, SGX reported. For the month, DBS gained 4 per cent, United Overseas Bank rose 4.6 per cent, and OCBC Bank inched up 1.5 per cent.

Singapore Telecommunications (Singtel) added 6.5 per cent, while Keppel Corp jumped 15.7 per cent, after Temasek Holdings last month announced a surprise S$4 billion partial offer to raise its stake in Keppel Corp to 51 per cent.

The top performer of the 50 most traded stocks during the Halloween month was Rex International with a 37 per cent gain, taking its 10-month total return to 95 per cent.

On Oct 16, the Catalist-listed oilfield services firm announced an oil and gas discovery in the Norwegian Sea. Preliminary estimates placed the size of the discovery between three and six million standard cubic metres, or about 19 and 38 million barrels of recoverable oil equivalents.