Jan 22, 2015

    Markets up on stimulus hopes for Europe, China

    EXPECTATIONS of new stimulus measures in Europe and China boosted most regional markets, including the local bourse.

    The benchmark Straits Times Index (STI) added 20.4 points or 0.6 per cent to 3,354.5 yesterday, its third straight day of gains.

    Trading was range-bound for most of the day until the final minutes, when the STI jumped by another 10 points to end at the day's high after European markets opened.

    Turnover was relatively healthy, with two billion shares worth some $1.1 billion changing hands, compared with the 1.2 billion shares worth $949.7 million traded on Tuesday.

    The European Central Bank (ECB) is slated to release its monetary statement today.

    Markets are anticipating that the ECB will announce a round of quantitative easing (QE) measures in the form of a bond-buying programme to boost the stuttering economy in the euro zone.

    Analysts say the size of the programme could be anywhere around 500 - 600 billion euros (S$772 - S$927 billion).

    Hopes are also rife that China could embark on fresh moves to ease its monetary policy in order to support slowing economic growth.

    "We might see a stronger upside for equities if the ECB announces a bigger-than-expected QE," Rivkin Securities strategist Tim Radford told Bloomberg.

    "The rally in Chinese equities has been strong and it doesn't look like it's abating, given expectations of further monetary easing in China."

    Regional markets also rose in tandem: Shanghai jumped 4.7 per cent, Hong Kong rose 1.7 per cent while Seoul gained 0.2 per cent.

    The only exception was Tokyo, which dropped 0.5 per cent after the Bank of Japan disappointed investors by not announcing new monetary stimulus measures after its meeting.

    Giving the biggest lifts to the STI were four stocks that, together, made up close to half the index's gains.

    Hong Kong Land rose 16 US cents to US$7.64, SIA increased 44 cents to $12.49, UOB was up 13 cents to $23.35 and CapitaLand added six cents to $3.40.

    Keppel Corp and Keppel Land called trading halts pending a corporate announcement, with rumours that the parent firm could privatise the property arm.

    Another Keppel unit that was firmly in the limelight was Keppel T&T, which was among the day's top gainers, up 17 cents or 11.4 per cent to $1.655.

    It announced a jump in fourth-quarter net profit from $17.7 million to $198.4 million, largely due to asset sales.