Mon, Jan 13, 2020 – 6:25 PM
WITH investors looking to Wednesday’s signing of the US-China “Phase One” trade deal in Washington, Asian markets had a calm start to the week despite some market participants offloading positions ahead of the US corporate earnings season.
“Overall, risk sentiment looks positive on the back of optimism over an improvement in the economic relationship between the US and China ahead of the ‘Phase One’ signing this week,” AxiTrader chief Asia market strategist Stephen Innes said.
In the Singapore market, the Straits Times Index (STI) spent Monday trading in range and hovering around last Friday’s close of 3,255.95. It eventually settled at 3,251.07, a dip of 4.88 points or 0.15 per cent.
With equity markets mostly pricing in the interim trade agreement – announced in December 2019 – and relations between Beijing and Washington showing stability, DBS Group Research analysts are seeing 3,195 as the most likely support level for the STI.
The local benchmark’s performance paled in comparison to other markets in the Asia-Pacific such as China, Hong Kong, South Korea and Taiwan, all of which posted comfortable gains.
Taiwan’s Taiex Index advanced 88.77 points or 0.7 per cent to 12,113.42 after a landslide election victory for President Tsai Ing-wen and her Democratic Progressive Party.
Like the STI, blue-chip indices in Australia and Malaysia ended lower. Japanese markets were closed on Monday.
In Singapore, trading volume clocked in at 1.36 billion securities, 15 per cent over the 2019 daily average. Total turnover came in at S$977.26 million, 92 per cent of last year’s daily average, suggesting heavy penny activity.
Across the market, advancers outpaced decliners 217 to 176. Seventeen of the benchmark’s 30 counters ended in the red.
Among STI counters, Singtel, which fell S$0.05 or 1.5 per cent to S$3.27, continued to be weighed down by news of plans by associate Bharti Airtel to raise up to US$3 billion through equity and debt. Since the announcement last Thursday, Singtel shares have lost 3.5 per cent.
ST Engineering shares closed S$0.03 or 0.7 per cent lower at S$4.03. While recent price action suggests its shares are on a downtrend, RHB Securities head of Singapore research Shekhar Jaiswal expects ST Engineering to outperform the STI this year, with double-digit profit growth in FY2020-2021 due to contributions from recent acquisitions and a record-high order book.
Its ability to generate free cash flow should enable it to deliver high dividend yields, Mr Jaiswal added. RHB has a “buy” call on ST Engineering with a price target of S$4.55.
Among firms in the second line, Creative Technology shares added S$0.04 or 1.2 per cent to S$3.40 after snagging six awards following the launch of new additions to its suite of Super X-Fi products at last week’s CES show.
Looking ahead, investors will be scrutinising this week’s bank earnings that kickstart the US corporate earnings season for the September-December 2019 quarter, IG market strategist Pan Jingyi said. The street is expecting results to be mixed as lower interest rates are likely to offset higher trading revenue.