UOL Group could benefit from a couple of recent developments. First off, if CapitaLand’s shareholders vote for privatising its development business, and to list CapitaLand Investment Managers (CLIM), it might be booted off the FTSE EPRA NAREIT Developed Index, which has only three developers. Analysts have already viewed City Developments (CDL) as a beneficiary although it has a host of problems. UOL Group, if deftly managed, could reap even more rewards.
For one, UOL is as underappreciated as its understated major shareholders, the Wee family. UOL subsidiary, United Industrial Corp holds a portfolio of office buildings that could experience a rebound in occupation following the announcement by the government that employees may return to work from April 5. In addition, UOL is trading at a higher discount to book than CDL. And of course it has the potential to carry a higher weight in the FTSE EPRA NAREIT Developed Index.
Technically, UOL has yet to break out of a range. Resistance is at the twice tested $7.80–$7.90 range. Quarterly momentum is neutral and hovering around its equilibrium line. But it could easily rise. ADX has turned up from low levels and the DIs are positively placed. And the 50- and 100-day moving averages are drawing together. A successful break above $7.90 indicates an initial target of $8.50. Support is at $7.51, at the 50-day moving average which appears to be turning up. UIC itself continues to move progressively higher following its break above a thrice tested resistance and a multi-month base at $2.45, indicating an initial upside of $2.90.
Singapore Press Holdings attracted quite a bit of attention during the week of March 22–26. The stock is on its way to an initial upside of $1.60. This was the target indicated when prices broke out of a multi-month base formation at $1.25 on Feb 23. The chart pattern continues to improve, with even the short-term daily chart indicating more upside than just $1.60. For punters, $1.25 is no longer a stop-loss or support level. This has to be raised to $1.30 as prices rise. There is some resistance at $1.41–$1.42. Since indicators are still positive, and the 100- and 200-day moving averages have just made a golden cross, resistance at $1.42 is likely to be successfully challenged.
The Straits Times Index spent the past five sessions in a tight range. Week on week, the index gained a miniscule five points. However, the STI had already moved above the 3,071–3,118 range when it broke out during the week of Mar 15-19. This move provides the impetus for the index to test the 3,368–3,377 range in the next four to six weeks. Quarterly momentum continues to test the confluence of a resistance and its own moving average and needs a little nudge to break out of this range. The index’s long-term indicators continue to rise and should be able to support the STI’s uptrend. Hence, overall pressure should be upwards. Immediate support is at the 3,071–3,118 range.
The local banks are major components of the STI. Investors of local banks cheered when on March 25, Moody’s Investors Service upgraded the Singapore banks. “We have changed the outlook for Singapore’s banking system to stable from negative,” says Eugene Tarzimanov, vice-president and senior credit analyst at Moody’s. He attributes this to recovering macroeconomic conditions, better asset quality, and lower provisions that will all boost profitability in 2021. Meanwhile, common equity tier 1 ratios of the banks are likely to remain high although funding and liquidity improved. In fact, Moody’s points out that banks could resume pre-pandemic dividend payouts. No surprise then that banks are likely to maintain their gradual uptrends. All three broke out of multi-month sideways ranges in mid-November.
DBS Group Holdings was first off the blocks, followed by Oversea-Chinese Banking Corp and United Overseas Bank. All three reached their 2021 highs in the first half of March, with DBS testing an intra-day high at $29 on March 9. They have all since retreated in the wake of short term overbought conditions. For OCBC, its March 10 high was at $11.82 and UOB’s at $25.80 on March 9. These are likely to be resistances the banks need to challenge before they embark on the next stage of their upmove.
