Jun 27, 2014

    Singapore bourse regains consciousness

    TRADERS crept back into the trading ring yesterday and pushed the Straits Times Index out of the flat zone for the first time this week.

    The increased activity propelled the benchmark index up 17.03 points, or 0.52 per cent, to 3,278.57.

    Most regional bourses also ended higher: Tokyo gained 0.3 per cent, Shanghai added 0.7 per cent, Seoul rose 0.7 per cent, Hong Kong surged 1.5 per cent and Sydney advanced 1.2 per cent.

    One driver of the widespread optimism was a report out overnight that showed business spending in the United States picked up last month, following a winter slump.

    Other data showed consumer spending in the world's biggest economy rose last month, and that manufacturing activity also picked up.

    ABN Amro Private Banking's chief investment officer, Didier Duret, said in the bank's third-quarter investment outlook report released on Wednesday: "The key message this quarter is that investors can benefit from the current conjunction of positive forces.

    "Equity markets rallied in anticipation of the economic recovery, but have not yet come back to normal valuation levels."

    Semiconductor firm Stats ChipPac was in the spotlight, rising eight cents to 61.5 cents on turnover of 59 million, amid fresh speculation that it is in talks with several parties wanting to buy the firm.

    Banking stocks were mostly higher after a CIMB Research report yesterday reiterated its positive rating of the sector.

    DBS rose 10 cents to $16.86, United Overseas Bank gained eight cents to $22.61 while OCBC was flat at $9.60.

    "DBS remains our top pick, followed by OCBC and UOB," said analysts Kenneth Ng and Jessalynn Chen.

    "DBS has the largest Singdollar current- and savings-account base, and the lowest Singdollar loan-to-deposit ratio, which makes it more protected against the impending deposit competition."

    The analysts expect that foreign banks operating here will need to compete more aggressively for deposits as tighter liquidity rules kick in under banking-sector reforms.

    Cordlife Group added 1.5 cents to $1.18, after DMG & Partners Research initiated coverage of the stock yesterday with a "buy" call.

    "Cordlife's strong presence in the mature markets of Singapore and Hong Kong, and, recently, high-growth countries like India, Indonesia and the Philippines, allows it to tap the rising awareness and adoption of cord-blood storage in Asean," wrote the brokerage.