Joey was interviewed on 938 Live after the trading session ended on Friday, 23 June 2017.
We have seen a pretty bullish 1st half of 2017 so far for the Singapore Market but as we come to the end of this 1st half, some weaknesses were seen recently. Want to find out the reasons behind the weakness?
More importantly, as we head into the 2nd half of the year, can the recent weakness still continue or can the bulls come back to regain control like we have experienced in the 1st half? Also, what are some of the key levels we should keep an eye on for the STI and what is the 1 stock that Joey is watching right now?
The full transcript of the interview can be seen below too.
Joey, what is your assessment of the STI performance today and also for the 1st half of the year?
The first half of 2017 has been quite bullish with the STI actually rallying by more than 10% since the beginning of the year from 2900 to above 3200 level now.
For today, the Singapore market opened up 8 points, bucking Wall Street’s sell down with DOW Jones closing down 13 points. The sell down in the US markets was due to weakness in the financial shares.
However, the market strength in the morning was short-lived with the STI turning lower almost immediately due to Global Logistic falling by more than 9% after a Financial Times report on bidders dropping out.
Other than that, most of the stocks were pretty flat with not much actions ahead of the long weekend so STI was mostly negative throughout the day with occasional bargain hunting and finally we saw the STI closing down just 6 points at 3209.
Recently, we know that there were several key economic events, the US raising interest rates and oil prices entering bear market, what’s in store for the STI going into the 2nd half of the year in your opinion?
Well, yes indeed the Federal Reserve has hike interest rates by 0.25% last Wednesday, the 2nd time this year. This is on the back of the economic data strengthening and unemployment rate falling to its lowest level in 16 years which is actually a good thing.
Crude oil prices have fallen by about 20% since the beginning of the year to below USD43 now despite an effort led by the OPEC to cut production since January.
So we are continuing to see weakness in the oil and gas sector in Singapore with oil heavy weights like Keppel Corp and Sembcorp Marine falling by more than 10% since March.
On a bright note, despite the oil and gas sector being a drag on the market, we have seen banks like DBS and OCBC and even property developers like Capitaland and City Development pushing higher supporting the STI.
Technically, I would say that the STI has been supported strongly above the 3200 level over the past 2 months and I believe that we can still see more strength into the 2nd half of 2017 with this level holding.
Let’s also talk about what’s the stocks or sectors you are looking at right now are?
Well, one can consider this stock called Manulife Reit for some potential upside.
It has recently announced its maiden acquisition of a prime office asset in the US in New Jersey for USD115m. This building enjoys a high occupancy rate of 99% and has a diversified tenant base.
Fundamentally, Manulife Reit has strong organic rental growth and allows one to gain an exposure to the rebounding US economy and office sector. It also offers an attractive dividend yield of more than 7%.
Technically, its trend has also started to turn upwards over the past 2 months on a move above the 0.87 resistance level. So this can open the way to more upside towards 1.00 and 1.20 in the short to midterm.