Apr 18, 2014

    Fed stance helps buoy up Asian markets

    REASSURING comments from the United States Federal Reserve and a strong close on Wall Street overnight helped keep Asian shares positive even though trading was quiet ahead of the long weekend.

    Activity was subdued here, with the benchmark Straits Times Index inching up just 0.6 point, or 0.02 per cent, to 3,253.8 points, which left it 1.7 per cent higher for the week.

    Fed chairman Janet Yellen said on Wednesday that the US central bank would be delivering policy stimulus measures for some time to come. Her dovish comments - coupled with data showing that US industrial production had enjoyed a stronger-than-expected increase last month - cheered markets there.

    "The global economic cycle is gradually improving, and monetary conditions are easy," said Mr Shane Oliver, the Sydney-based head of investment strategy at AMP Capital Investors.

    "The trend in share markets is likely to remain up."

    In Asia, most bourses ended higher, if only slightly.

    Hong Kong gained 0.28 per cent, Taiwan climbed 0.23 per cent and Sydney rose 0.63 per cent.

    Tokyo closed unchanged, while Shanghai shed 0.3 per cent.

    Banks in Singapore saw their stocks come under the spotlight ahead of their first-quarter results. United Overseas Bank and DBS are due to report their numbers next week; OCBC has yet to announce its release date.

    DBS advanced six cents to $16.90 while OCBC edged up a cent to $9.65, but UOB fell three cents to $22.07.

    OCBC Investment Research head Carmen Lee noted in a report on Tuesday that UOB had outperformed both its peers on the bourse this year.

    "Recently, the market seems to favour quality stocks," she wrote, adding that UOB delivered better-than-expected earnings of $773 million for the fourth quarter.

    Keppel Corp sank 20 cents to $10.99, after the firm said on Wednesday that net profit for the first quarter had dropped 5 per cent year-on-year to $339 million.

    Yongnam Holdings dropped half a cent to 23.5 cents. DMG & Partners Research has initiated coverage of the stock with a "buy" call. It noted that the civil engineering firm's business is likely to turn around this year, after having been beset by cost overruns and weak earnings last year.

    "The addition of a director for its engineering department, plus the expansion of its skilled labour force in design, engineering and engineering coordination, should be able to aid in project execution," wrote analyst Sarah Wong.