After having fallen 109 points in five straight sessions up to
Monday, the Straits Times Index on Tuesday rebounded 25.15 points to
2,999.56. This was in line with an overnight rally in Wall Street and
gains in Hong Kong and China, although weakness in the Dow futures
probably led to a stalling of the upward momentum - the index rose to
near its closing level in the late morning and stayed there for all of
the second half.
As has become the norm in past months, turnover was low at 1.3
billion units worth S$880.3 million. Volume in STI components amounted
to 220.4 million units worth S$603.5 million, which means that non-STI
stocks only contributed about S$277 million or 31 per cent of total
business. Excluding warrants, there were 265 rises versus 140 falls.
The three banks have been the main drivers of the index throughout
the year and it was again the case on Tuesday. DBS led the way with a
S$0.35 or 2 per cent jump to S$17.60 on volume of six million shares
following its Monday release of third quarter figures.
Macquarie Warrants (MW) said in its daily newsletter that Macquarie
Equities Research (MER) believes the key reasons to buy DBS are (i) good
earnings momentum in a relative context, (ii) relative beneficiary of
higher rates given the strong S$ liquidity position, (iii) potential to
lift dividend payout ratios, and (iv) potential to shift the strategic
focus towards cost efficiency if growth opportunities continue to
disappear. It has a 12-month target price of S$20.
