Jul 28, 2016

    Japan stimulus, fund-flow talk cheer punters

    SINGAPORE shares drifted higher on fund buying and improved sentiment yesterday after Japan said it would use a bigger-than-expected stimulus package to reinflate the economy.

    The more positive mood lifted the Straits Times Index 0.27 per cent or 8.05 points to 2,941.49, led by Jardine Cycle & Carriage which gained 3.9 per cent or $1.43 to $37.88. It releases Q2 earnings tomorrow.

    Besides the news of Japan's 28 trillion yen (S$360 billion) economic stimulus package, investors were buoyed by talk of more cash coming into the local market.

    "Singapore is a beneficiary of fund flow that is slowly coming back to this region because of fears over the European Union after Brexit.

    "But whether these flows will be sustained remains to be seen," Nicholas Teo, a trading strategist with KGI Fraser Securities, said.

    Property counter CapitaLand rose 0.9 per cent or three cents to $3.19 ahead of the United States Federal Open Market Committee

    (FOMC) meeting outcome this morning.

    "Today will be very critical because five big blue-chip constituents will be reporting their earnings," CMC Markets Singapore analyst Margaret Yang Yan said.

    UOB, OCBC, HongKong Land and Sembcorp Marine announce Q2 earnings today while Singapore Airlines will announce Q1 numbers.

    "STI's performance will be affected by the two banks' earnings. Analysts are worrying about their net interest margins as well as non-performing loans because of the consolidation in oil prices," Ms Yang said.

    Banking counters DBS Group, UOB and OCBC rebounded yesterday.

    DBS gained 0.4 per cent or six cents to $16.26.

    UOB rose 0.4 per cent or eight cents to $18.94.

    OCBC climbed 0.1 per cent or one cent to $8.85.

    Singapore Airlines dipped 0.7 per cent or eight cents to $11.12, on expectations that its earnings may be hit by the "seasonality effect, or the off-peak travel period between March and June", Ms Yang said.

    SembMarine was flat at $1.46, with analysts expecting weak oil prices to take a toll on the oil-rig builder's earnings per share.