Oct 06, 2015

    Local shares up as Fed may hold rate hike

    Singapore shares rallied on a positive lead from Wall Street on expectations that the first hike in United States interest rates in nearly a decade is back on hold after disappointing jobs data.

    The benchmark Straits Times Index jumped 2.08 per cent or 58.10 points to 2,851.25, led by banking counters.

    DBS jumped 2.4 per cent or 38 cents to $16.51, OCBC rose 2.1 per cent or 18 cents to $8.95 and UOB gained 1.6 per cent or 30 cents to $18.58.

    Telco Singtel helped as well, climbing 2.8 per cent or 10 cents to $3.66.

    "We think it is too soon to call an end to the equity bull market," Citi Research analyst Mark Schofield said.

    "Timing is crucial, but we believe that there will be selective buying opportunities coming out of the recent moves.

    "We should, of course, expect increased volatility and decent-sized corrections in markets as bull cycles mature."

    Bourses also rallied in most of Asia, except for Chinese markets, which are closed until Wednesday for the Golden Week.

    Hong Kong rose 1.6 per cent, Japan was up 1.6 per cent, Indonesia jumped 3.2 per cent and Thailand rose 1.3 per cent.

    Remisiers said the equities rally will depend on how well US companies perform in the third-quarter earnings season, which begins this week, given a weakening China and a strong US dollar.

    Meanwhile, traders are watching for further signals on rates from the Federal Reserve meeting at the end of the month and non-farm jobs numbers in October and November.

    "If non-farm payrolls pick up in October and November, then a December rate hike is still on the cards," remisier Alvin Yong said.

    The most actively traded stock yesterday was New Wave Holdings, which closed flat at 1.2 cents with 89.4 million shares traded.

    Fragrance Group founder and owner Koh Wee Meng picked up 38.6 million shares at 0.9 cent to 1.1 cents a share last week, lifting his direct interest from 6.1 per cent to 8.8 per cent.

    Fellow penny play Stratech Group climbed nearly 12 per cent or 0.5 cents to 4.7 cents, with 68.6 million shares traded.

    Golden Agri-Resources gained 4.5 per cent or 1.5 cents to 35 cents on trade of 53.6 million while Spackman Entertainment Group fell 6.8 per cent or 0.4 cents to 5.5 cents, with 53.6 million shares traded.

    OCBC Investment Research has a buy call on grocery retailer Sheng Siong, which rose 1.2 per cent or one cent to 83.5 cents.

    "Managing margins has always been a challenge for the grocery retailing industry. We like that in Singapore, grocery players like Sheng Siong Group continue to engage in productivity efforts," the research house said.