Dec 23, 2014

    STI and Asian peers ride Santa rally

    FESTIVE cheer came early for investors yesterday as the local stock market started the holiday-shortened trading week on a high note.

    The Straits Times Index (STI) jumped 51.4 points or 1.6 per cent to 3,330.96 - its biggest one-day jump since Sept 19 last year, when the index added 58 points or 1.8 per cent.

    Shares rose higher in line with the increase seen in stock markets in Asia, on the back of what traders are hoping will be the continuation of a "Santa" rally, where the year-end feel-good factor traditionally gives a boost to markets.

    Hong Kong gained 1.3 per cent, Seoul rose 0.7 per cent, Shanghai added 0.6 per cent while Sydney jumped 1.9 per cent, though Tokyo was subdued and ended the session flat.

    The role of Santa Claus this year is being played by the United States Federal Reserve, which last week said it was in no hurry to raise interest rates, giving markets worldwide continued ample liquidity.

    "In general, investors seem to be feeling that it's safe to buy after the Fed has shown that it is not in a hurry to raise rates," Shoji Hirakawa, chief equity strategist at Okasan Securities, told Bloomberg.

    A more stable level of crude-oil prices also played a part in the rally, as Brent stayed above US$62 a barrel in Asia trading, raising hopes that the commodity will not suffer further declines.

    Energy plays were among the day's biggest beneficiaries on the local market, with no decliner on the FTSE ST Oil and Gas index.

    Rig-builder Keppel Corp shot up 26 cents to $8.86 while Sembcorp Marine rose 13 cents to $3.32.

    Telco SingTel was up seven cents to $3.89, contributing a six-point increase to the STI. A Singapore Exchange My Gateway report noted yesterday that SingTel had a total return of 13.3 per cent for the year to date.

    Banks also helped to lift the STI. United Overseas Bank rose 43 cents to $24.18, also adding six points to the STI, while OCBC Bank gained 15 cents to $10.41, contributing 5.4 points, and DBS rose 15 cents to $20.80 and contributed three points to the index.

    Water-treatment membrane-maker Memstar Technology was the top-volume counter, with 463 million shares changing hands. Its shares closed one cent higher at 2.5 cents - a rise of 66.6 per cent.

    It resumed trading yesterday, after calling for a halt on Dec 1. Memstar announced yesterday that it is in a US$420 million (S$550 million) reverse-takeover deal with natural-gas developer Longmen Group.