Aug 05, 2015

    S-chips in demand as China rebounds

    LOCAL shares almost clawed themselves out of the red yesterday, after positive news from China reversed the pessimism that had held sway for most of the day.

    Investors were in a sour mood after factory gauges showed a weakening manufacturing sector in China, but hopes that the government will unleash further stimulus measures sparked some late bargain hunting.

    It allowed the Straits Times Index, which had fallen as much as 17.32 points earlier in the day, to regain some ground and close down 1.75 points or 0.05 per cent at 3,191.04.

    "This is a good time to bargain hunt if you believe the Chinese government is going to add further stimulus to support growth," remisier Alvin Yong said.

    The Chinese central bank has room to cut interest rates further and China's US$3.69 trillion (S$5 trillion) of foreign-exchange reserves and relatively low national government debt levels mean it has the ammunition for fiscal stimulus.

    Chinese regulators now require short-sellers to wait one day before returning the borrowed shares, a move that will push out day traders and help stabilise the market, IG market strategist Bernard Aw said.

    Back home, Noble Group continued to be the most actively traded counter as short-covering drove the stock up nearly 28 per cent or 13 cents to 60 cents, with 263.2 million shares traded.

    "Traders are covering back shorts just in case the company surprises on the upside for its second-quarter earnings, and ahead of the SG50 long weekend.

    "Many traders won't hold positions over the long weekend because the Singapore market won't be open for them to react to macro-economic news, or developments in other markets," Mr Yong said.

    Positive sentiment from the rebound in Chinese equities also spilled over into S-chip plays, which dominated the most actively traded list.

    Stratech Group jumped 14.5 per cent or 0.9 cent to 7.1 cents, with 108.6 million shares traded, while Chinese Global skyrocketed 38.7 per cent or 1.2 cents to 4.3 cents with 77.7 million shares traded.

    Debao Property soared 54.5 per cent or 1.8 cents to 5.1 cents, with 72.1 million shares changing hands, and Qingmei surged 43.8 per cent or 0.7 cents or 2.3 cents, with 64.3 million shares traded.

    After falling 12 per cent, or 30 cents since Thursday to a year low of $2.20 on Monday, Global Logistic Properties rebounded 6.8 per cent or 15 cents to $2.35, with 60.7 million shares changing hands.

    "The stock rebounded after going ex-dividend on Monday. The stock attracted bargain hunting after dropping more than its dividend payout of 5.5 cents a share," Mr Yong said.