Date: July 1, 2024
- The STI traded around the 3,300 mark for most of the month
- Final net loss for June was about 4 points or about 0.11% at 3,332.80
- Of the STI second liners SATS and Jardine C&C stood out
- Over in the US, tech stocks continued to push main indices higher
- US inflation data was mixed, still no clarity on when rates might be cut
- Jasper Investments in the news after raising S$22m from placements
- OCBC’s offer for Great Eastern “not fair but reasonable”, delisting only if conditions are acceptable
- MAS, CAD investigating Seatrium over potential offences linked to Brazil corruption case; stock falls xx% in heavy trading
- Maybank: Singapore’s defensive status will serve it well
Flirting with the 3,300 level
The Straits Times Index spent the most of June hovering around the 3,300 level. It fell below on 14 June when it closed at 3,297, whilst its highest closing was 3,348 on 3 June. In other words, the index traversed a range of about 50 points throughout the month, eventually settling at 3,332.80 for a net loss of 4 points or 0.11%.
The performance in the final week made for better reading, with the index rising 26 points or 0.8%. However, after rising for the first four days, it ended Friday with a 10.55 points loss.
For the quarter, the STI was up 108 points or 3.34% and for the first half the index gained 92 points or 2.8%.
Index stocks that saw regular action in June included the usual names – the three banks, Singtel and SIA. However, there was also a focus on airport handling agent SATS and diversified automotive group Jardine Cycle & Carriage – for former probably because of a profit turnaround and the latter possibly because of its exclusion from a Morgan Stanley Capital Singapore Index that led to a large selloff followed by a rebound.
SATS started the month at S$2.78, peaked at S$2.96 on 10 June before finishing at S$2.85 on Friday for a net gain of S$0.07 or 2.5%. Jardine C&C in the meantime, started at S$25.74, rebounded to S$29 on the 21st before ending at S$26.60 for a net gain of S$0.86 or 3.3%.
US inflation data was mixed, no clarity on when rates might be cut
The Federal Reserve’s preferred inflation measure, the personal consumption expenditure index was virtually unchanged in May, matching expectations and bringing the year-over-year increase to 2.6% from 2.7% in April.
The Dow rose 3.8% in the first half of the year. The S&P 500 rose 14.5%. The Nasdaq Composite rose 18%.
The yield on the 2-year Treasury note rose slightly to 4.72%. The 10-year yield was up to 4.342%.
Jasper Investments in the news after raising S$22m from placements
Although there was the usual churning of low-priced issues with no accompanying news, Jasper Investments grabbed some of the headlines after the entry of strategic investors, including well-known businessman Koh Boon Hwee, a former Singtel and DBS chairman and currently a board director of Singapore sovereign wealth fund GIC.
Marine and shipping firm Jasper, which is currently on SGX’s watch list for having reported three consecutive years of pre-tax losses, said in early June that it had secured S$9 million in capital via the placement of some 6.2 billion shares at S$0.0015 cents each tagged with 3.1 billion new free warrants.
Later in the month, the company announced it has raised a further S$13 million through the issue of an additional 8.6 billion shares at S$0.0015 apiece to new investors. It also said it that it has agreed to acquire a 51 per cent stake in Prosper Excel Engineering for S$7.5 million.
Jasper’s shares started June at S$0.001 and ended the month at S$0.008.
OCBC’s offer for Great Eastern “not fair but reasonable”, delisting only if conditions are acceptable
OCBC’s offer to buy the remaining shares of Great Eastern Holdings (GEH) from minority investors is “not fair but reasonable”, said independent financial adviser (IFA) Ernst & Young (EY) Corporate Finance.
In a separate statement, OCBC said its S$25.60 per share offer price is final and will not be increased. The bank also extended the offer’s closing date from June 28 to July 12.
In a subsequent statement to the Singapore Exchange (SGX), OCBC head of investor relations Collins Chin noted that the offer price is at a 36.9% premium to the last traded price and a 41.9% to the six-month volume-weighted average price.
“We continue to believe that the offer represents a meaningful premium to the last traded prices of the shares,” he said. Mr Chin added in the SGX statement that OCBC notes that even though Ernst & Young Corporate Finance regards the offer as “not fair but reasonable” its advice was that GE shareholders still accept it.
Also, OCBC’s position with regards to delisting GE is that this will be done only if it’s in the bank’s interests to do so and if conditions are acceptable. “The listing status of GE shares does not affect the close relationship between OCBC and GE, which already share a synergistic relationship, and is part of our ‘One Group’ strategy to customise a full suite of integrated solutions for our customers’’ said Mr Chin.
MAS, CAD investigating Seatrium over potential offences linked to Brazil corruption case; stock falls 24% in June in heavy trading
Shares of offshore and marine company Seatrium were in heavy play during the month after the company announced it is involved in a joint investigation conducted by the Monetary Authority of Singapore and the Commercial Affairs Department.
The potential offences are related to a decade-old bribery case in Brazil, infamously dubbed “Operation Car Wash”.
Formerly known as Sembcorp Marine, Seatrium said the potential offences are under the Securities and Futures Act and the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act.
Seatrium’s shares started June at S$1.76 but finished the month at S$1.38 for a loss of S$0.38 or almost 24%.
Maybank: Singapore’s defensive status will serve it well
In a 10 June Singapore Market Strategy report, Maybank said it has raised its year-end STI target to 3,583 as higher-for-longer interest rates brings Singapore’s defensive and low-gearing characteristics back in favour.
“The recent 1Q24 results season confirms this. Market earnings accelerated at the fastest pace since 2Q23’’ said Maybank. “Importantly, nearly a third of our coverage companies delivered earnings ahead of forecasts while downgrades fell. This means the market expectations are bottoming out, giving greater clarity on the STI’s earnings growth’’.
The broker’s top 10 picks are: DBS, Dyna-Mac, Macro Polo, SCI, Singtel, ST Eng, CICT, Frencken, Genting SG and StarHub.
