Aug 01, 2014

    Hunger for blue chips fattens STI

    SINGAPORE stocks powered to a 14-month high yesterday on the back of strong gains in China-related counters amid month-end window dressing.

    The benchmark Straits Times Index (STI) climbed 20.41 points, or 0.61 per cent, to 3,374.06 while trading volumes were higher than usual, with 1.7 billion shares worth $1.6 billion done.

    "We saw some window dressing, with strong buying interest in the blue chips," said a broker.

    "But overall market interest is still pretty quiet; we are not getting plenty of calls."

    Window dressing involves parties with vested interests propping up share prices by buying index heavyweights, such as SingTel and bank stocks, to make themselves look good in reviews.

    Key regional markets finished mixed, with Shanghai seeing the most robust gains, rising 0.93 per cent. This capped the best month for China shares since December 2012, with banks and mining companies leading the charge.

    Japan dipped 0.16 per cent while Hong Kong inched up 0.10 per cent.

    Back home, the spotlight was on the blue chips, with 15 of the 30 STI component counters ending in positive territory, 10 losers and five unchanged.

    Property plays with China links had a particularly bright outing, with CapitaLand soaring 13 cents to $3.45 and Hongkong Land rising 12 US cents (15 Singapore cents) to US$6.85. These two stocks alone accounted for a six-point rise in the STI.

    Not to be outdone, index heavyweight SingTel charged up seven cents to $4.07, equalling its best finish since late 2007.

    There were also robust gains for the three banks, with DBS Group Holdings up 14 cents to $18.22, OCBC Bank seven cents in front at $9.98 and United Overseas Bank 11 cents higher at $24.16.

    In contrast, Singapore Airlines dived as much as 3.2 per cent during the session for its biggest drop in 14 months, as analysts trimmed their earnings forecasts in the wake of bearish results.

    SIA was very much on the investor radar yesterday after unveiling a downbeat set of quarterly earnings on Wednesday, sliding 27 cents to $10.33.

    DBS Group Research analyst Paul Yong noted: "Its first-half earnings are likely to remain muted, which can be attributed to the recent spate of aviation incidents temporarily dampening demand amid a still-weak consumption environment globally."

    SMRT was also under the spotlight after reporting a decent set of first-quarter earnings a day ago, inching up 1.5 cents to $1.58.

    OCBC Investment Research analyst Andy Wong noted: "There is still uncertainty over the timeframe and details of (the Land Transport Authority's) rail-financing framework implementation. This may limit SMRT's near-term share-price upside potential."