Central banks' moves keep STI stagnant

GOOD NEWS: MAS' surprise move to slow the appreciation of the Singdollar gave a boost to the market, in anticipation of higher growth with a weaker currency.


    Jan 30, 2015

    Central banks' moves keep STI stagnant

    A TUG-OF-WAR between optimism and pessimism came out even yesterday, as the local market ended flat.

    Investors were buoyed by the Singapore central bank's move to ease monetary policy, but glum over a more hawkish stance by its United States counterpart that may mean earlier rate hikes.

    Investors wrestled with these two major pieces of news before the Straits Times Index closed at 3,419.05, a dip of just 0.1 point.

    Stocks dropped at the start of trade, and fell by as much as 17 points before climbing back up to positive territory by midday.

    Shares then stayed in the black for most of the afternoon, up by as much as nine points, before the final half hour when investors took flight again after European markets opened lower.

    The Monetary Authority of Singapore's (MAS') surprise move to slow the appreciation of the Singapore dollar gave a boost to the market, in anticipation of higher growth with a weaker currency.

    But the US Federal Reserve's first monetary statement for the year, issued at the end of a two-day meeting on Wednesday, called job gains "strong" instead of "solid". Activity was upgraded to "solid" from "moderate".

    More worryingly for markets, it dropped a pledge to keep rates low for a "considerable time", though it would be "patient" in normalising its monetary stance.

    "Overall, the economy will benefit from a softer Singdollar, and that really helped the market to fend off the negative sentiment due to the hawkish Federal Open Market Committee stand," said Phillip Futures investment analyst Howie Lee.

    Asian bourses fell substantially across the board, after Wall Street slid more than 1 per cent.

    Hong Kong and Tokyo both surrendered 1.1 per cent, Shanghai decreased 1.3 per cent and Seoul lost 0.5 per cent.

    Abalone producer Oceanus Group - the top volume counter and among the top gainers - rose 0.2 cent to 1.2 cents with 59.4 million shares traded, after it announced moves to cut cost and improve revenue.

    ComfortDelGro added 16 cents to $2.94 while Singapore Airlines rose 24 cents to $12.80 to climb to the gainers' leader board, as the two transport plays continued to benefit from lower crude oil prices.

    Banks were lower even though analysts were positive about their prospects, on expectations of higher net interest margins as interest rates rise.

    DBS Group Holdings lost six cents to $19.96, OCBC Bank dropped three cents to $10.47 and United Overseas Bank declined three cents to $23.37.