Published May 30, 2009

Market cap rises 23% to $535.7b in May

Climb to 9-month high brings market value gain for first five months to 36.3%; top 7 places remain unchanged

By VINCENT WEE

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BUOYED by an ongoing recovery in share prices driven by optimism that the downturn may have bottomed, market capitalisation rose 23.2 per cent this month to a nine-month high of $535.7 billion, from $434.9 billion at end-April.

The rise in May brought the year-to-date gain to 36.3 per cent - from end-December 2008's $393 billion.

The big got bigger, with the top seven places remaining unchanged in May - SingTel, Wilmar, the Jardine twins and the three banks remained entrenched at the top of the heap, as their gains more or less paced the overall market.

Singapore Airlines and CapitaLand swapped places for the next two spots as investor perceptions of the relative fortunes of the respective sectors changed. Big oil industry-related players Keppel and Sembcorp Marine also crept up the rankings on rising oil prices during the month.

Standout gainers among the top 50 were bombed-out property counters that had taken the worst of the sell-off in recent months, including Keppel Land and City Developments. The former increased its market value more than twice and the latter by almost half to $8.59 billion during May. Smaller developer Ho Bee also gained, doubling its value.

The market seems optimistic of a rebound, but investors are still wary.

Keppel Land recovered from what investors believed to be oversold levels, rising more than 2.5 times to $3.37 billion despite announcing a rights issue the month before. It was helped by a more positive outlook on the residential property sector. Some analysts have upgraded the counter, while others have warned that recovery is a long way off, and that the commercial property sector in which KepLand is a big player is also under severe pressure.

Ezion also rose by over 2.5 times to $373.5 million. The relatively quiet offshore oil and gas logistics and support services provider, in which Ezra has a substantial stake, looks set to gain from several rig charter deals coming into effect.

Related article: Click here for full list of market capitalisation

Abalone producer Oceanus also did well, more than doubling its market value to $529.5 million.

On the downside, among the bigger companies, ST Engineering and ComfortDelgro each lost just over 9 per cent to $7 billion and $2.69 billion respectively.

Investors were disappointed as ST Engineering reported a 30.4 per cent fall in first-quarter net profit to $85.2 million on decreased profitability at its key aerospace division as well as lower profits from the land systems division.

In percentage terms, however, the biggest loser was RSH, which shed 55.1 per cent to $141 million. The retail group yesterday reported a Q4 net loss of $6.6 million, sinking further into the red. Although RSH reported a $16.2 million full-year net profit, it warned of a challenging environment in the year ahead and expects gross margins to come under pressure.

The market seems cautiously optimistic of a rebound as some economic indicators suggest a bottoming out, although investors are still wary that the recovery may be a drawn-out one.