Jul 21, 2015

    China lifeline helps to pull STI up

    A POSITIVE lead from Chinese equities, following news that the government is pumping money to stem the stock-market rout, helped lift Singapore shares.

    Concerns over Greece are easing after the Greek Parliament approved a slew of austerity measures supported by the German Parliament.

    The key benchmark Straits Times Index rallied 20.03 points to 3,373.48, with 1.86 billion shares worth $1 billion traded.

    "It's a relief rebound, thanks to the 3 trillion-plus-yuan (S$660 billion plus) market stabilisation fund," a remisier said.

    Government agency China Securities Finance Corp (CSFC) has between 2.5 trillion yuan and 3 trillion yuan on tap to support stocks.

    These funds will likely be used to offer liquidity support to brokerages, and to buy stocks and mutual funds.

    "CSFC has acted as a conduit to inject rescue funds into the stock market," HSBC China equity strategist Roger Xie said in a note yesterday.

    "The recovery also alleviates the widespread trading suspension. More A-share companies have resumed trading this week. But 25 per cent of the market is still under trading halts."

    Traders are cautious ahead of the release of purchasing managers' index (PMI) factory data from China, Germany, France and the United States, all due on Friday.

    "If the manufacturing data from the US is good, that may fuel speculation that the interest-rate hike will likely be in September this year," the remisier said.

    Penny plays continue to rule the roost, with CEFC International still hogging the most actively traded list, surging 80 per cent or eight cents to 18 cents, with 127.5 million shares traded.

    "Investors are betting on penny plays because CEFC's gains have been spectacular," remisier Desmond Leong said.

    S-chip Foreland Fabritech Holdings skyrocketed 115 per cent or 1.5 cents to 2.8 cents, with 74.8 million shares traded, while Sino Construction jumped 28 per cent or 0.9 cent to 4.1 cents, with 181.8 million shares traded.

    New Silkroutes Group, another hotly traded penny counter, surged 100 per cent or 0.1 cent to 0.2 cent, with 58.8 million shares traded.

    Meanwhile, speculation that Temasek Holdings may sell its 67 per cent stake in Neptune Orient Lines (NOL) sent the shipping firm up 7.4 per cent or 6.5 cents to 94 cents, with 30.1 million shares traded.

    Said OCBC Investment Research, which has a hold call on NOL: "Post-divestment of its logistics business on May 15, NOL has become a pure-play container shipping company, and we think that it is indeed now more attractive to prospective buyers."