Nov 05, 2015

    Investors cheer China's economic plans

    REGIONAL markets chalked up strong gains yesterday, taking their cue from China where investors were encouraged by Beijing's economic plans for the next five years.

    News emerged overnight that the Chinese government is targeting "medium-high" growth of at least 6.5 per cent in its five-year economic plan, while pledging further efforts to open up capital markets.

    Eager for signs of clarity and stabilisation, investors cheered the signals, sparking a 4.31 per cent surge in the Shanghai Composite, its best daily gain in seven weeks. Hong Kong was lifted by renewed expectations for the Hong Kong-Shenzhen Stock Connect and gained 2.15 per cent. Tokyo went up 1.3 per cent.

    The mood was also positive on Wall Street overnight, as the Dow Jones Industrial Average put on 0.5 per cent, owing partly to a tech and energy sector rally.

    Against this backdrop, Singapore's benchmark Straits Times Index rose strongly for the second straight day, up 40.92 points or 1.36 per cent to 3,040.48. But remisier Alvin Yong was not convinced of the strength of the increase.

    "The market went up mainly due to the sentiments spilled over from China and Hong Kong. Investors are still looking for green shoots in the growth outlook, but Singapore's manufacturing activity is still very weak. The index can go south the moment further downbeat signs emerge. I still see the index going sideways between 2,960 and 3,080," he said.

    The Nikkei Singapore purchasing managers' index reading was 50.2 for last month, implying a near stagnant growth.

    However, there were bright spots due to corporate actions, Mr Yong noted, pointing to Zagro Asia, which went up 3.5 cents or 13.46 per cent to 29.5 cents yesterday. The investment company announced on Tuesday that it has received an offer of 30 cents per share for a buyout and delisting.

    Biosensors International Group also rose after its announcement yesterday before the market opened that it will merge with CB Medical Holdings on an offer of 84 cents per share. Its shares rose 13.5 cents or 19.85 per cent to 81.5 cents.

    "These developments showed that many small- and mid-caps are dealing much lower than a book value that really reflects their fundamentals. There are good deals in the segment, but investors must weigh the risks carefully," Mr Yong cautioned.

    Meanwhile, Rowsley closed 0.3 cents or 1.51 per cent lower at 19.6 cents, ahead of its announcement of a $4.2 million net loss in the three months to Sept 30.

    Chief executive Lock Wai Han stressed that the property and architecture firm will continue to look for investment opportunities in the real-estate and hospitality sectors.

    Among the blue chips, Noble Group was again the top gainer, up 2.5 cents or 5 per cent to 52.5 cents, with 50.9 million shares transacted. CapitaLand also rose, up nine cents or 2.88 per cent to $3.21.

    The property giant yesterday reported a 48.3 per cent year-on-year increase in third quarter net profit to $192.7 million, as performance across all business units improved.

    OCBC Investment Research maintained its buy call for CapitaLand in a note yesterday, saying: "Despite cautious market sentiments about China, the group continues to report robust residential sales in the third quarter, and it has a steady pipeline for the fourth quarter with over 2,000 units launch-ready."

    SIA Engineering dropped the most, down five cents or 1.26 per cent to $3.93, followed by Yangzijiang Shipbuilding, which fell one cent or 0.79 per cent to $1.25.