Local stocks up on Wall Street lead, China rally
SINGAPORE shares closed higher on a positive lead from Wall Street and a rally in Chinese stocks on speculation that more stimulus measures are in the works to prop up the sagging property market.
The Straits Times Index (STI) closed 0.47 per cent or 13.38 points up to 2,883.64.
Shanghai provided much of the spark after it closed up 2.3 per cent on talk that Chinese authorities could make mortgage interest payments tax-deductible.
Chinese brokerages and banks also rallied on reports of tax-deductible interest payments.
The surge in developer stocks in China fuelled gains in Singapore-listed China-related plays like CapitaLand, Global Logistics and Yanlord.
CapitaLand jumped 1.92 per cent, or six cents to $3.18, with 16.2 million shares traded; Global Logistics gained 1.49 per cent or three cents to $2.05, with 23.5 million shares traded; and Yanlord advanced 1.45 per cent or 1.5 cents to $1.05.
Meanwhile, broker RHB has upgraded the Singapore stock market to overweight from neutral, saying it expects the market to rebound modestly in the second half of next year.
"We think the credit cycle will be kick-started following the US Fed interest rate lift-off... In particular, we expect the large-cap stocks to stage a progressive recovery following a rout since July," RHB head of Singapore research Ong Kian Lin said.
"Our bottom-up STI target of 3,200 points represents an implied 13.3 times 2016 forecast earnings," he added.
He recommends that investors stay selective, with banks, transport, technology, plantations and utilities as preferred sectors. Residential property market prices could fall by six to eight per cent, he said.
"We expect some cooling measures to be lifted in the second half of next year, after property prices corrected 12 to 15 per cent from the peak."
Penny plays remained the most actively traded, with Alliance Mineral jumping 14.8 per cent or 1.9 cents to 14.7 cents, with 45.5 million shares traded while Memstar Tech gained 8.3 per cent or 0.1 cent to 1.3 cents on trade of 27.7 million.
Loyz Energy slipped 1.43 per cent or 0.1 cent to 6.9 cents, with 27.5 million shares changing hands.
Sembcorp Marine slumped to its lowest level in more than six years after warning that it expects a net loss for the fourth quarter ending Dec 31, and a significant decline in net profit for the full year.
The rigbuilder said its earnings are being hit by the challenging operating environment and customers deferring or seeking to defer rig orders.
SembMarine fell 4.4 per cent or nine cents to $1.97, while Sembcorp Industries dipped 2.8 per cent or nine cents to $3.16.
SembMarine also disclosed that its unit PPL shipyard has filed a suit against Marco Polo Marine for breaching a contract for a jack-up rig. Marco Polo claimed there was no basis to PPL's suit.
DBS Group Research, which downgraded SembMarine to fully valued from hold, noted there "may be more bad news to come - deferments, cancellations, asset deflation (and so on) - in view of the prolonged oil crisis".