Date: September 30, 2024
- The STI fell 51 points or 1.4% to 3,573.36, dragged lower by banks and Singtel
- Despite index’s loss, market strength appeared to broaden last week
- On Wall Street, the Dow set its 32nd all-time high for the year
- DFI Retail Group was the STI’s biggest gainer, up 13.5%
- Despite closing several Giant outlets, DFI is still attractive: analysts
- Amos Group received general offer of S$0.07 per share from chairman
- Telecommunication Stocks On the Move in Singapore: SGX Research
- China announced fresh stimulus measures
Falls in the banks and Singtel cap the STI’s 3-week surge…
The banks and Singtel have been instrumental in pushing the Straits Times Index above the 3,600 to several consecutive 17-year highs so it was only to be expected that weakness in DBS, UOB and OCBC halted the index’s upward momentum.
Last week a S$1.40 or 3.6% drop in DBS to S$37.60, a S$0.72 or 2.2% loss for UOB at S$32.22 a S$0.36 or 2.3% fall in OCBC to S$15.11 and a S$0.19 or 5.6% slide in Singtel to S$3.21 meant that the STI, which had gained 182 points or 5.3% in three weeks, fell 51 points or 1.4% to 3,573.36.
Average daily volume was a respectable S$1.6b last week compared to S$1.51b the week before.
…but market strength appears to be broadening
The STI rose on Monday to a fresh 17-year high of 3,638.54 but then fell over the following four sessions. There were however, signs that the rally enjoyed by the index was spreading throughout the broader market – even as the STI fell between between Tuesday and Friday, the overall advance-decline score was overwhelmingly in favour of the advancers.
On Tuesday, the score was 405-219, on Wednesday it was 302-289, on Thursday it was 428-226 and 404-244 on Friday.
On Wall Street, the Dow set its 32nd all-time high for the year
The Dow Jones Industrial Average posted its 32nd record close for the year on Friday as the latest inflation data indicated further price cooling in August, lifting expectations for additional interest rate cuts by the Federal Reserve.
A day earlier, the Commerce Department confirmed that the U.S. GDP grew at an unrevised 3% rate in the last quarter. Meanwhile, China-focused U.S. companies outperformed during the week as a fresh set of stimulus measures took effect in the world’s second-largest economy (see later in this article).
The S&P 500 added 0.6% for the week, while the Nasdaq Composite advanced 1.0%, and the blue-chip Dow gained +0.6%.
Traders now see a 53% chance that the central bank opts for another half-point interest rate cut in November, an uptick from 49.3% on Thursday, according to the CME FedWatch Tool.
DFI Retail Group was the STI’s biggest gainer, up 13.5%
The STI’s largest gainer was Jardine Matheson’s DFI Retail Group, which surged US$0.26 or 13.5% to US$2.18. The supermarket and retail store operator last week announced plans to divest its entire stake in Yonghui Superstores to low-cost retailer Miniso.
DFI Retail’s sale of 1.9 billion shares in the Chinese supermarket operator is expected to result in about 4.5 billion yuan (S$823.6 million) in gross cash proceeds.
Despite closing several Giant outlets, DFI is still attractive: analysts
DBS analysts Andy Sim and Chee Zheng Feng were quoted in a Business Times report last week saying DFI appears to be closing some Giant outlets whilst focusing on the Cold Storage and CS Fresh branding, as well as fresh, ready-to-eat options – bakeries, salad bars and takeaway Japanese sushi – to supplement its fresh products and grocery repertoire.
DFI has also been differentiating itself from its peers through its Meadow house brand and Yuu rewards platform, they added.
Meanwhile, management had previously guided that the Giant store closures “are part of its right-sizing strategy to improve profitability by shutting down unprofitable stores”, they noted.
“We understand and believe that there are no specific consumer habit changes that led to the shutdown,” they added.
Giant recently announced the closure of its supermarket on Toa Payoh Lorong 4. The closure on Sep 15 is its ninth since February this year, after the shutters came down on its hypermart in Sembawang, three supermarkets and four smaller express stores. Following the closure, Giant will still have 45 outlets here.
Jayden Vantarakis, Macquarie Capital’s head of Asean and Singapore research, noted that DFI has shown a “willingness to downsize, divest and focus on improving shareholder returns”.
Amos Group received general offer of S$0.07 per share from chairman
Offshore oil and gas equipment manufacturer Amos Group received a voluntary unconditional general offer of S$0.07 per share in cash from its controlling shareholder, PeakBayou, which is a private equity fund of Hong Kong-based firm ShawKwei & Partners, which is in turn majority-owned by Amos’ executive chairman, Kyle Arnold Shaw.
The controlling shareholder directly owns about 145.5 million shares in Amos, representing 69.85% of the issued capital in the company.
PeakBayou said the offer price would be final as the offeror does not intend to increase it.
Amos supplies products, services, and solutions to marine and energy customers. It has been listed on the Singapore Exchange’s main board since 2012.
Telecommunication Stocks On the Move in Singapore: SGX Research
Global communication indices have outpaced broader global benchmarks this year, while Singtel, AIS TH SDR, NetLink, Starhub and APTT have averaged 20% total returns, reported SGX Research in a Market Update last week, adding that Singtel has led these five counters this year, with a 37% total return, while also seeing its 2024 average daily turnover soar 90% from 2023 levels.
“Singtel has led the net institutional inflow into all local stocks this year with S$938 million of net buying. Starhub has again ranked among the 20 stocks with the highest net insti buying this year as it did in 2023. While most insti activity on AIS is booked in Thailand, the AIS TH SDR can facilitate block trades in minimum clips of at least 50,000 units.’’ Said SGX Research.
China announced fresh stimulus measures
China’s central bank chief Pang Gongsheng on Tuesday said the People’s Bank of China (PBOC) would cut the amount of cash banks have to hold in reserve – known as reserve requirement ratios (RRR). The RRR will initially be cut by half a percentage point, in a move expected to free up about 1 trillion yuan or about US$142b.
Further measures aimed to boost China’s crisis-hit property market include cutting interest rates for existing mortgages and lowering minimum down payments on all types of homes to 15%.
The country’s real estate industry has been struggling with a sharp downturn since 2021. Several developers have collapsed, leaving large numbers of unsold homes and unfinished building projects.
The PBOC’s new economic stimulus measures come just days after the US Federal Reserve lowered interest rates for the first time in more than four years with a bigger than usual cut. The plans also included measures to help support the stock market.
The move would benefit 150 million people across the country, Pan said, and reduce “the average annual household interest bill by about 150 billion yuan”.
Beijing will also create a “swap programme” allowing firms to acquire liquidity from the central bank, Pan said, a move he said would “significantly enhance” their ability to access funds to buy stocks.
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