STI in the black as China shares rise
THE market ended slightly in the black yesterday as investors took heart from the surge of stocks in Shanghai and Hong Kong.
The 5.4-point gain in the Straits Times Index (STI) to 3,508.6 was also something of a rebound from Monday's 22-point loss.
While the advance was welcome, the benchmark index was partially held back by the weak performance of major component stock Singtel, which fell six cents or 1.36 per cent to $4.35.
Singtel, the owner of Australia's second-largest telco Optus, has requested to delist from the Australian Securities Exchange due to low trading volume, liquidity and market demand.
Total market volume yesterday was 2.03 billion worth $1.23 billion, compared with Monday's 2.6 billion shares worth $1.15 billion traded.
"The main action is now in Hong Kong and China. We're just following them," said a remisier at Phillip Securities. "Our volumes are okay, but Hong Kong and China did strongly."
Hong Kong's Hang Seng Index jumped 2.8 per cent and Shanghai's Composite Index rose 1.8 per cent.
Part of the recent surge in Asian stocks has been fuelled by funds rotating out of United States markets and the US dollar, both of which have been performing strongly.
Others pointed to expectations that China will further boost stimulus to strengthen its flagging economy.
The People's Bank of China, the central bank of the world's second-biggest economy, cut the reserve requirement ratios for banks over the weekend in an effort to spur lending.
The Chinese central bank is now expected to cut the rate on reverse repurchase agreements to help revive the economy, a Bloomberg survey found.
China will report tomorrow on last month's preliminary Purchasing Managers' Index (PMI) for manufacturing, a mirror of factory activity.
United Overseas Bank noted yesterday that China's PMI is "likely to remain below the 50 mark".
At home, data on Singapore's last month's inflation will be released today while industrial production numbers will be released on Friday.
Singapore experienced a fourth month of deflation in February, after consumer prices fell 0.3 per cent that month.
UOB said it expects industrial production to "remain in contraction mode". It fell 3.6 per cent year-on-year in February and rose a tepid 0.9 per cent in January year-on-year.
DBS Bank fell 24 cents to $20.78, while UOB rose 12 cents to $24.16.