THE tiredness exhibited by the local market on Wednesday proved to be a precursor of things to come as prices fell yesterday across-the-board. Weighed down by weakness in Hong Kong and by expectations of a soft Thursday for Wall Street, the Straits Times Index finished 17.24 points down at 2,913.25, with the broad market recording 256 falls versus 190 rises, excluding derivatives. In the previous three trading sessions, the STI had risen 33 points.

 

Turnover, however, remained high at 2.8 billion units worth $2.4 billion excluding foreign currency issues. The average value traded of 85 cents pointed to still-feverish interest in penny speculatives.

As noted before in this column, such hectic punting usually signals a market top.

 

Shares of the Singapore Exchange, a direct beneficiary of rising volume, ended 12 cents higher at $8.46 with seven million traded. In calling a 'sell' on SGX, DMG & Partners said that it does not expect the strong volume done so far in January to last for much longer.

 

'Over the past five years, the STI generally rises in January, although this did not occur during periods of economic uncertainty such as in 2008 and 2009. January's ADT (average daily turnover) is usually stronger than the prior month's by between 27 and 85 per cent, or an average of 47 per cent. If we apply a 47 per cent month-on-month expansion to January 2010, January's ADT could hypothetically be around $1.79 billion. Hence, we are not particularly excited . . . as it is a seasonal phenomenon,' said DMG, setting a $7.60 price target for SGX.

 

Genting Singapore's slide, which began earlier this week, continued when the stock lost three cents to $1.24 on volume of 174 million.

 

In a Jan 6 report. Deutsche Bank downgraded Genting Singapore to a 'hold'. It said that Genting's price has far exceeded Deutsche's $1.17 target and now at 21x 2010 EV/Ebitda (enterprise value/earnings before interest, taxes, depreciation & amortisation), Genting is the world's most expensive casino stock.

 

'We see the widening valuation gap unsustainable in the long run,' said Deutsche. Its $1.17 target is based on a sum-of-parts methodology and Deutsche said that for cheaper exposure to the Singapore casino market, it prefers parent company Genting Bhd.

 

In the banking sector, UOB shares first rose to $20.60, but ended unchanged at $19.90 following news that it is to sell its UOB Life Assurance to Prudential for $428 million. Analysts generally welcomed the move - Bank of America-Merrill Lynch's Loo Kar Weng and Alistair Scarff, for example, said that although the monetary gain is minimal at around 28 cents per share, the sale makes good commercial sense and thus reflects UOB's business acumen.

 

In its Jan 6 Singapore Property report, Macquarie Equities Research said, after speaking with industry players, that much of the optimism has already been priced in.

 

'Relative to other sectors, we believe the Singapore property sector is unattractive due in part to outperformance last year (86 per cent rise for developers and 70 per cent for Reits versus the STI's 65 per cent)'.

 

Macquarie said that the sector is trading close to revalued net asset values (RNAV), which makes it expensive. Also, feedback from developers is that the latter are all looking to replenish their landbanks this year, which raises the risk of overpaying. The broker also said that its main 'underperform' calls are for City Developments and Keppel Land as they are trading at premiums of 23 and 17 per cent to RNAV.