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The Week in Numbers: Wall Street Rally Continues

Photo credit: Eva K.. Licence: CC BY-SA 2.5

The S&P 500 and the Nasdaq hit record highs for the fourth consecutive trading session on Wednesday, August 29. The most valuable company in the world, Apple, led the way hitting an all-time high and pushing the three major US indexes up. Amazon.com and Alphabet also got a boost as Morgan Stanley analysts increased their price target. On Wednesday, 58 constituent stocks in the S&P 500 posted 52-week highs with just one stock hitting a new low. The Nasdaq Composite had 101 stocks posting new highs and 20 new lows.

DBS Group Holdings Ltd (SGX: D05) was named the world’s best bank by Global Finance magazine. This is the first time an Asian bank has received the accolade from the New York-based publication. DBS is recognised for its digital innovation, which in turn has led to cost savings and a higher return on equity (ROE) for shareholders. Historically, its ROE has been under 11%, but that has risen to 12.5% in the first half of 2018. The bank hopes to achieve an ROE of 13% eventually.

Meanwhile, the Singapore dollar is approaching the upper boundary of its trading band as market participants speculate that the central bank will boost the exchange rate for the second time this year in a bid to reduce inflation. Core inflation was 1.9% in July, its fastest pace in four years, up from the 1.7% inflation rate in June. Monetary Authority of Singapore can manage inflation by strengthening the Singapore dollar, thus lowering the cost of imported goods. In April, it shifted from a “neutral” stance to a “slightly faster” appreciation of the Singapore dollar. Analysts estimate the currency to gain 0.5% per year against a basket of major trading partners’ currencies.

Singapore services sector expanded 7.8% in the second quarter of 2018. Information and communications services led the way with receipts increasing 13.5% yearon-year, up from the 10.3% recorded in the previous quarter. Revenue from the financial and insurance industry rose 10.1%, while business services increased by 7.9%. One sector to see lower takings was the recreation and personal services industry which declined 2.8%.

According to Bloomberg calculations, Chinese investors sold net HK$25.4 billion (S$4.42 billion) of Hong Kong equities in August through to Tuesday, 28 August. That’s the largest monthly net sale in more than three years. Tencent Holdings Ltd accounted for more than half the sales. Possible reasons for the outflow of Chinese money away from Hong Kong stocks could be investors moving away from riskier assets amidst the US-China trade tension, China’s deleveraging squeezing liquidity and the yuan’s weakness hurting sentiment.

Finally, Vodafone Hutchison Australia and TPG Telecom announced plans to merge on Thursday, August 30. Their combined market cap will be A$15 billion (S$14.96 billion), and will take on rivals Telstra and Singapore Telecommunications Limited (SGX: Z74)-owned Optus.

TPG Telecom is an ASX-listed telecommunications provider that is also one of the country’s largest internet service providers. It has a fixed-line residential subscriber base of more than 1.9 million people and organisations. Vodafone Hutchison Australia is the third largest mobile operator with a customer base of six million. It remains to be seen how the merger will affect Optus’ profitability and market share going forward.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has a recommendation on Amazon, Apple, DBS Group Holdings Ltd and Tencent Holdings Ltd. Motley Fool Singapore contributor Jeremy Chia owns shares in Alphabet C Shares, Tencent Group Holdings Ltd and DBS Group Holdings Ltd.