Apr 02, 2014

    S'pore banks help STI stay positive

    SINGAPORE stocks extended their rally to a fifth straight session yesterday, led by gains in blue-chip banking counters after OCBC struck a deal to buy Wing Hang Bank.

    The benchmark Straits Times Index rose 9.9 points yesterday to close at 3,198.52, with OCBC up 0.5 per cent or five cents to $9.56 a share, with 10.1 million shares changing hands.

    DBS Group Holdings gained 1.24 per cent, or 20 cents, to $16.37, with 6.2 million shares changing hands, while United Overseas Bank edged up 0.4 per cent or nine cents to $21.74, with 2.7 million shares done.

    "Local banks, under pressure to increase return-on-equity, are strategically positioning themselves to further expand into Greater China to generate more income through yuan trading," CMC Markets analyst Kenny Kan said.

    OCBC, in a statement yesterday, offered HK$38.4 billion (S$6.2 billion) to buy Wing Hang Bank in a deal that will give the Singapore bank more access to China-related business in Hong Kong - the biggest centre for offshore yuan trading.

    It is the largest takeover of a Hong Kong bank since DBS, OCBC's largest competitor in Singapore, offered $10 billion for Dao Heng Bank Group in April 2001.

    Investors were also heartened by Federal Reserve chairman Janet Yellen's comments that the world's biggest economy will need Fed stimulus for "some time", easing concerns that interest rates may rise earlier than previously forecast.

    Dr Yellen said the Fed hasn't done enough to combat unemployment, even after holding interest rates near zero for more than five years and pumping up its balance sheet to US$4.23 trillion (S$5.3 trillion) with bond purchases.

    Persistent weakness in China's manufacturing sector also fuelled hopes that the authorities may loosen monetary policy in order to keep the world's second-biggest economy growing at the government's target rate of 7.5 per cent.

    The official purchasing managers' index edged up to 50.3 last month from 50.2 in February, but some economists said even that suggested weakness, as activity typically picks up more after the Chinese New Year holidays in February.

    Semb Corp was among the top five losers in the index, shedding 1.46 per cent or eight cents to $5.41 a share, with 1.25 million shares changing hands.

    Keppel Corp fell 0.55 per cent to $10.83 a share, with 3.29 million shares traded, while Global Logistic Properties, a provider of logistics facilities in China, Japan and Brazil, dropped 1.13 per cent, or three cents, to close at $2.62, with nearly 19 million shares done.