Senior Correspondent
Bookmark & Share
AFTER losing 86 points in last week's selloff that was supposedly caused by weakness in the China stock market, the Straits Times Index yesterday rebounded 67.47 points to 2,612.33 following Friday's Wall Street rally that was reportedly founded on economic recovery hopes.
Brokers described the session as generally quiet in terms of client activity, leading to the suggestion that a fair amount of the activity was driven by short-covering and programme trading involving selected stocks - just as it was in Hong Kong, where the Hang Seng Index regained 1.7 per cent after losing 3.3 per cent last week.
Property stocks were mainly firm, though this was probably more due to a broad-based firming of all sectors than any specific new development. Last week the government said there will be no changes to the present tax framework governing property profits but brokers dismissed this as probably having little or no effect on the affected stocks.
OCBC Investment Research for example, said: 'While we think that there may be some buyers who stayed sidelined in view of the uncertainty and may return to the market in the light of the announcement, we believe that there is just a small proportion of such buyers. As such, we think that this news is unlikely to lead to a sudden surge in buying of properties. We maintain our 'neutral' view on the property sector'.
In its August Singapore Property report, Morgan Stanley said its base case thesis for developers is that previous premiums to NAVs (net asset values) and book value that were seen in 2006-7 are difficult to justify today. 'Back then, all the property sub-segments were in an upcycle due to excess demand over available supply. However, at present, the sole bright spot appears to be the residential segment and the S-developers are not pure residential plays,' said MS.
It also maintained its view that the office, retail, industrial and hospitality segments are likely to face oversupply until 2012.
Banks were the main index movers, with all three rising sharply. Among them was DBS whose 26 cents rise to $12.92 added 5.3 points to the STI. Citi Investment Research yesterday issued a 'buy' on the stock with a revised target of $15.50.
Among other factors, Citi said it now projects profit growth for DBS of +25 per cent in FY10 and +22 per cent in FY11 based on 3-7 per cent loan growth and modest NIM (net interest margin) improvement to 210 basis points. 'Our 2009 estimated profit of $2 billion remains 12 per cent above Bloomberg consensus,' said Citi.
In the second line, China Hongxing Sports was among the handful of China stocks in play - the others being Jiutian and Yangzijiang - with a 1.5 cent rise to 20 cents on volume of 78 million.
In a 'hold' recommendation dated Aug 23, Deutsche Bank said the company was off to a weak start for its first quarter for FY2010 because of a 26 per cent drop in its August 2009 order book.
'The company continues to lag behind its peers in terms of operating performance and profitability. This could be attributed to the higher inventory levels at its distributors, slower store expansion and product discounts/rebates provided to distributors . . . we expect short-term weakness in the share price due to the disappointing August 2009 order book,' said Deutsche.
Turnover on the market was 2.87 billion units worth just under $2 billion.
Search Property News
