Local rally on hopes of stimulus in China
SINGAPORE shares extended last week's rally, riding on a wave of optimism in China, where sentiment was buoyed by hopes of more economic stimulus from Beijing.
The local benchmark Straits Times Index added 1.12 per cent, or 33.61 points, to punch through the psychologically important 3,000 point level, ending the day at 3,032.11. Last week, the STI rallied 7.3 per cent.
IG market strategist Bernard Aw noted that the day had actually started off on a subdued note.
"Weak performance in the United States markets last Friday pointed to a cautious start for Asian markets," he said in a note to clients yesterday.
"However, halfway through the morning trade, Hong Kong shares rallied, followed by China, on a one-two combination of initial public offering news and speculations of more stimulus in the pipeline."
Specifically, China's State Council said on Saturday that it will increase tax support for shanty town developments. The central bank also unveiled a trial allowing banks to borrow funds from it using credit assets as collateral.
Shanghai soared 3.3 per cent, Hong Kong gained 1.2 per cent and Sydney rose 0.9 per cent. Tokyo was closed for a holiday.
Despite the positive start to the week, Mr Aw said "it doesn't feel right for the rally to continue", as there are no positive developments in the global economy.
Noble Group was the most actively traded stock at home, rising 4.5 cents to 51.5 cents, on a turnover of 186 million shares.
The firm led a rally in commodity stocks, which mostly tracked raw material prices higher.
Golden Agri Resources added 1.5 cents to 38 cents, Wilmar International gained four cents to $2.93, Indofood Agri rose a cent to 55 cents while Olam International was flat at $2.
Property developers were mixed, after Maybank Kim Eng Research issued a report saying it was positive on the sector, as it is "past the worst of policy tightening".
Citing a media report which said that the Government has rejected property developers' call to extend their project-completion deadlines, analyst Derrick Heng wrote that developers may have to lower their asking prices soon.
"We believe that this would set the stage for a lifting of property cooling measures in 2016," he added. "While a change in measures may not necessarily arrest home-price declines, we believe it could trigger a rebound in sales volume."
City Developments advanced eight cents to $8.24 and Keppel Corp gained a cent to $7.45, while CapitaLand fell two cents to $3.13 and Wheelock Properties slipped a cent to $1.56.
Tat Hong added half a cent to 59.5 cents. OCBC Investment Research has maintained its "hold" rating on the stock, saying construction equipment players are still experiencing a slowdown in China.