Jun 01, 2016

    Month-end rebalancing eats small gains

    SINGAPORE shares closed slightly lower yesterday after earlier gains on the back of a rally in China and Hong Kong were wiped out by the fund managers' rebalancing of portfolios before the end of the month.

    The Straits Times Index (STI) had rallied as much as 1.3 per cent as optimism grew over the possible inclusion of Chinese stocks in the MSCI, an influential global benchmark.

    The move could channel billions in passive asset-management money into China, lifting stock prices in the process.

    Shanghai responded by surging up 3.34 per cent, Shenzhen rose 4.09 per cent and Hong Kong lifted 0.9 per cent.

    But the STI gave back all its gains in the final hour of trade, closing 0.2 per cent or 5.69 points down to 2,791.06.

    Blue chips led the way down: Singtel shed 0.8 per cent or three cents to $3.87; Keppel Corp sank 1.8 per cent or 10 cents to $5.38; Genting Singapore shed 2.6 per cent or two cents to 74 cents and DBS Group fell 0.3 per cent or five cents to $15.50.

    Other bank counters, OCBC and United Overseas Bank held up. OCBC rose 0.8 per cent or seven cents to $8.62 while UOB advanced 0.1 per cent or one cent to $18.22.

    Lee Yu Sheng, trading representative of Maybank Kim Eng. noted "This could be due to short positions initiated towards the end of the trading day, or a rebalancing of portfolios at month-end by bigger players."

    DBS Group Research said: "We expect bank stocks OCBC and UOB to be underpinned by higher United States interest rate expectations as that also implies an improving US economy... their recent correction looks to have ended."

    DBS maintained a positive view on ComfortDelgro, saying the easing of previous curbs on car loans last week could lift COE prices and deter private car hire players from expanding their fleets.

    The most actively traded counters included Cedar Strategic, which closed flat at 0.3 cents, with 108.7 million shares traded, and Ezra Holdings, down 5.8 per cent or 0.4 cents to 6.5 cents on trade of 104.7 million shares traded.

    Noble Group rebounded 5.4 per cent or 1.5 cents to 29.5 cents, with 98.6 million shares traded while Global Logistic Properties dipped 0.3 per cent or 0.5 cents to $1.81, with 54.5 million shares traded.