CGS-CIMB Research analysts Lim Siew Khee and Jeremy Ng Choon Heng have maintained their estimate for the Straits Times Index (STI) at 3,488 points at end-2021.
The estimate, in a June 30 report, comes as the republic’s economic growth remains steady, with core inflation up. The property market has also remained strong, note Lim and Ng.
In CGS-CIMB’s June wrap-up, the STI closed the month 1.08% lower m-o-m or 33.82 points down at 3,130.46 points, following the relaxation of the Covid-19 Phase Two (Heightened Alert) measures in the middle of the month.
“Nevertheless, with the weakness leading to a retest of the 3,100 support, the relentless buying pressure near the 3,100 level recently suggesting that the uptrend remains firmly intact,” write the analysts.
“Notably, the sharp bullish reversal on June 30 formed a significant bullish price action, signalling the resumption of the uptrend. In fact, that the STI also bounced off the uptrend line at the same time was another sign of strength,” they add.
“Therefore, we expect the STI to trend higher to target the 3,280 resistance over the coming weeks. If any weakness reappears, the near-term support at 3,060-3,100 points will likely act as a floor, keeping the uptrend intact.”
Global markets got a boost from the US as the country looks to pass its US$1 trillion ($1.35 trillion) infrastructure plan.
On June 17, Enterprise Singapore (ESG) revealed that non-oil domestic exports (NODx) for the month of May rose 8.8% y-o-y but was down slightly at 0.1% m-o-m on a seasonally adjusted basis.
May’s headline inflation expanded 2.4% y-o-y, while core CPI inched up by 0.8% y-o-y.
Home sales in May fell 29.7% m-o-m, according to data released by the Urban Redevelopment Authority (URA), but was up 83% y-o-y.
For more stories about where the money flows, click here for our Capital section
Most sectors, with the exception of the oil and gas sector and REITs, closed the month in the red, albeit slightly.
Lim and Ng have noted that other than small inflows into REITs and consumer cyclicals, all other sectors were sold down.
“Outflows [were] particularly heavy in financials, telcos and industrials,” they write.
In contrast, retail investors were buying into the markets, specifically in the consumer non-cyclicals, industrials, telcos and financials, while selling consumer cyclicals.
To this end, Lim and Ng have identified their top picks on the Singapore Exchange (SGX) as Ascendas REIT (A-REIT), Frasers Logistics and Commercial Trust (FLCT), SATS, United Overseas Bank (UOB), ComfortDelGro (CDG), Singapore Press Holdings (SPH), Keppel Corporation, UOL Group Limited, Yangzijiang, CSE Global, Grand Venture Technology, Aztech, Q&M Dental and Japfa.
As at 1.53pm, the STI is trading 5.84 points higher or 0.2% up at 3,130.03.
Photo: Bloomberg
