Date: June 3, 2024
- The STI gained 1.3%, crossing 3,300 and stayed above it for eleven trading days – so far
- Five stocks dropped by MSCI saw heavy selling, especially on 31 May
- US inflation data was not encouraging, yet US indices rose for the month
- Probability of Sep rate cut now only 53%, rising to 84% in December
- Seatrium sank after consolidation, then rebounded after order wins, then fell again on MSCI exclusion
- STI Gained 7% over Six Weeks on Net Institutional Inflow: SGX Research
- The iEdge S-REIT Leaders Index is down 12.3% so far in 2024: SGX Research
The STI regained the 3,300 mark but 5 stocks dropped by MSCI
Possibly the two most significant features of the month of May as far as the local stock market was concerned was that the Straits Times Index (STI) regained the 3,300 level and managed to stay there for almost two weeks, and the announcement by Morgan Stanley Capital International that five stocks have been dropped from its Singapore Index – Seatrium, City Developments, Mapletree Logistics Trust, Mapletree Pan Asia Commercial Trust and Jardine Cycle & Carriage.
For the month, the STI added about 44 points or 1.3% at 3,336.59. About half this gain came in the final week of trading when the index rose 20 points or 0.6%. The index rose above 3,300 on 16 May, which means it has stayed above that level for eleven trading days.
Four of the five dropped stocks encountered heavy selling on 31 May
Four of the five stocks dropped by MSCI came under pressure on Friday, the final day of trading for May. The worst hit was Seatrium, which crashed S$0.10 or 5.4% to S$1.76 on volume of 236 million, a plunge which added S$417m to turnover.
City Developments was also hit, losing S$0.31 or 5.2% at S$5.61 with a hefty 78m done, valued at S$439m. Mapletree Logistics Trust fell S$0.02 to S$1.33 with 346m traded valued at S$461.5m whilst Jardine C&C lost S$0.32 or 1.23% at S$25.74 on volume of 14.8m valued at S$379m.
The only counter to escape selling on Friday was Mapletree Pan Asia Commercial Trust, which ended Friday unchanged at S$1.22 on volume of 262m, which was valued at S$320m.
In all, the value of trading in the five dropped stocks on Friday 31 May was S$2.01b or about 46% of the S$4.35b done that day. The latter was also the highest one-day total for the year to date.
US inflation data was not encouraging, yet US indices rose for the month
On the interest rate front there was mainly disappointing but not unexpected news, with the latest US inflation data pointing to the US Federal Reserve delaying its interest rate cuts.
The personal consumption expenditures price index, the inflation measure most closely monitored by the Federal Reserve, rose 2.7% from a year earlier in April. That was in line with forecasts and unchanged from March.
And the so-called core PCE price index, which excludes volatile food and energy costs, was up 2.8%. That was also unchanged from last month and just slightly above economists’ consensus expectations.
None of this was really new as far as the market was concerned, given that the message from the Fed of late has been that inflation is proving difficult to bring down to its 2% target, which means that interest rates will have to stay higher for longer.
As of Friday, the chance of a Sep rate cut was about 53%, rising to 68% in November and 84% in December.
Notwithstanding the increasing likelihood that interest rates will stay elevated, Wall Street’s major indices all managed gains for the month – the Dow Jones Industrial Average rose 2.3%, the S&P 500 5% and the Nasdaq Composite 7%.
Seatrium sank after consolidation, then rebounded after order wins, then sank again on MSCI exclusion
Offshore and marine company Seatrium’s shares were in heavy play in May following their 20-1 consolidation which took effect on 7 May.
On that day, the counter closed at S$1.94, which equated to a pre-consolidation price of S$0.097; however, they went into freefall thereafter.
On 15 May, they crashed to S$1.59 after their removal from the MSCI Singapore Index was announced. Their post-consolidation low came on 24 May when they sank to S$1.54, which equated to a pre-consolidation price of S$0.077.
On 27 May, they enjoyed a large rebound of S$0.18 or 11.7% to S$1.72 after the company announced it has secured S$11.8b in order wins in the year-to-date, driven by contracts from Petrobras and Shell, among other clients.
Seatrium’s current net order book stands at S$25.8 billion, comprising 31 projects with deliveries until 2030, excluding repair and upgrade projects.
The stock then rose to S$1.86 but finished the month at S$1.76, coming under pressure on the last day of the month as described earlier.
STI Gains 7% over Six Weeks on Net Institutional Inflow: SGX Research
In a 27 May report, SGX Research noted that the STI closing reading that day of 3,318.45 was its highest close since August 2023.
“From the mid-April lows to 27 May, the STI has gained 5.5%, with dividends boosting the total return to 7.4%, and the local benchmark marginally outpacing the FTSE APAC Index’’ said SGX Research.
“Over the six week period the Singapore stock market booked approximately S$330 million of net institutional inflow. The three Sectors that booked the most net institutional inflow in absolute terms included Banks, Financial Services and Real Estate Management and Development. The Healthcare and Energy sector also booked net institutional inflow, whereas the remaining sectors booked net institutional outflow’’.
The iEdge S-REIT Leaders Index is down 12.3% so far in 2024: SGX Research
In a 30 May Market Update, SGX Research said from the start of the year through to May 29, the iEdge S-REIT Leaders Index declined 12.3%, with reinvested distributions reducing the decline in total return to 9.5%.
“The 22 constituents of the Index have generated total returns that varied from 1.3% for AIMS APAC REIT to a 25.2% decline for CapitaLand China Trust. Over the period, the 22 constituents booked just over S$790 million of combined net institutional outflow, with Digital Core REIT, Frasers Centrepoint Trust and ESR-LOGOS REIT bucking that trend and booking net institutional inflow’’ said SGX Research.
Earnings and news in brief
Sats reported earnings of S$64.1 million for the six months ended Mar 31, a jump of more than 10 times from the S$6 million booked in the previous corresponding period by the in-flight caterer and ground handler. Revenue for the period more than doubled to S$2.7 billion, from S$953.8 million the year before. Earnings per share stood at S$0.043 for the half year, up from S$0.005 the previous year. Net profit for the full year was S$56.4 million, a turnaround from its net loss of S$26.5 million in the year-ago period. A final dividend of S$0.015 per share was declared for the full year, compared to the preceding year, when no dividend was declared. Once approved by shareholders at the Jul 19 annual general meeting, the dividend will be paid out on Aug 8, after the books are closed on Jul 26.
Boustead Singapore last week reported a 64% increase in net profit for the six months ended 31 March to S$37.3m due to higher gross profit and interest income, in addition to increased revenue from its geospatial, real estate solutions, and energy engineering businesses. Revenue for the six months climbed 27% to S$399.6 million and earnings per share was 7.82 Singapore cents, up 64.6%. The board has proposed a final dividend of four cents per share, up from 2.5 cents per share a year ago. This takes the dividend for FY24 to 5.5 cents per share, compared to four cents per share for FY23.
Yangzijiang Shipbuilding announced in a quarterly business update that its order book now stands at a record value of US$16.1 billion as at May 24. It has 193 vessels in its backlog to be delivered by 2028, with a total compensated gross tonnage of 7.45 million. The strong order book brings revenue visibility up to 2027, it said. Container ships made up the largest number (66 vessels with a value of US$9.3 billion) followed by oil tankers (58 vessels, US$2.8 billion), then bulk carriers (47 vessels, US$1.9 billion) and finally gas and ethane carriers (22 vessels, US$2.1 billion).
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