STI approaches 3.5k mark as China rallies
A RALLY in Chinese shares lifted the Singapore bourse yesterday to within striking distance of the 3,500 level.
The benchmark Straits Times Index jumped 18.79 points to 3,470.80, with 1.12 billion shares changing hands.
Blue chips helped power the local surge: Singtel gained nearly 1 per cent or four cents to $4.36, with 10.2 million shares traded, while banks DBS rose 0.4 per cent or eight cents to $21.13 and United Overseas Bank climbed nearly 1 per cent or 24 cents to $24.40. Jardine Matheson gained 0.5 per cent or 31 US cents to US$62.21.
Singapore and other Asian markets jumped after China's central bank cut interest rates for the third time in six months amid an economic slowdown, to ease the heavy debt burdens of companies and governments.
The cut came after China reported disappointing trade and inflation numbers in recent days, signalling that it is struggling to meet its official growth target of about 7 per cent.
The Shanghai Composite Index responded by surging 3 per cent, while Hong Kong's Hang Seng China Enterprises Index climbed 1.2 per cent and the Hang Seng Index advanced 0.7 per cent. Japan soared 1.25 per cent and South Korea added 0.6 per cent.
"Blue chips here were riding on positive sentiment from the China rally, due to the latest interest rate cut. Investors and traders believe the Chinese government will do whatever it takes to spur the economy back to 7 per cent growth," said Singapore remisier Alvin Yong.
"The question now is whether inflationary forces, like Chinese stimulus, will continue to be at work or deflationary forces, like the renewed threat of 'Grexit', will take over."
Euro-area finance ministers met yesterday to discuss a Greece bailout as resistance to further help for the country builds. The nation has to pay about 750 million euros (S$1.1 billion) to the International Monetary Fund today.
Penny stocks here were again among the most actively traded, with Sinjia Land plunging 52 per cent or 9.9 cents to 9.1 cents, with 22.6 million shares traded.
Sinjia, formerly known as HLN Technologies, transferred from the mainboard to Catalist on Friday. It got hit yesterday with a Singapore Exchange trading query about "unusual price movements" in its stock.
"Market talk is that its substantial shareholder, Ang Kong Meng, is selling most of his stake and nobody knows why," Mr Yong said. "The company also downgraded from mainboard to Catalist to avoid having to comply with the 20 cent minimum trading price rule."