Singapore Traders Spectrum - Wired Weekly

KEY POINTS
■ STI – Downward drift to 3270-3300 before bottoming out

■ ST Engineering - S$3.22 a good bargain hunting level

■ City Developments – dropped from FTSE Global Real Estate Index, wait for 19-20 June before buying


Wired Weekly
We do not rule out the STI drifting lower to 3270-3300 this month before bottoming out. While the index has fallen 217pts since mid-April high and is a mere 28pts above its 13x (-0.5SD) 12-mth forward PE level, we hesitate to call an immediate inflexion point

External uncertainties such as shifts in expectations to start of the US rate hike cycle, concerns about Greece’s ability to repay €1.6bil by month’s end and the spill over effect of a more volatile China equity market can result in market choppiness in the near-term. Technical indicators are also mixed and the STI has dipped below a support level at 3350.

Index heavyweights SingTel, banks, Jardine Group and Keppel Corp were the main index shakers to the downside since the STI turned down from mid-April. A rebound in the STI off the anticipated low at 3270-3300 should be likely led by these index component stocks, especially banks and SingTel.

We will also look at component stocks that we have Buy recommendations and have fallen considerably in percentage terms. These are ST Engineering and SIA. Technically, further weakness for ST Engineering shares towards the S$3.22 level is a good opportunity to bargain hunt. For SIA though, unless the stock can turn back above S$11.00, otherwise further weakness to S$10.20 is possible before bottoming out.


Technical Analysis
Daily Chart
Shares of City Developments fell 4.1% last Friday on news it will be removed from the FTSE EPRA / NAREIT Global Real Estate Index Series. The change will be effective as of 19 June close (i.e. from 22 June). The stock’s fundamentals remain intact. Tactically, avoid the stock now ahead of the deletion date in light of possible selling pressure due to unwinding but the final minutes of 19 June or on 22 June (if the unwinding extends one more day) should be a great time to bargain hunt the stock. (Read Report)

Source : DBS Group Research

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