STI buoyed by regional gains

CHINA RALLY: China's shares climbed to the highest level in seven years yesterday. Market watchers wondered if China stocks traded here, known as S-chips, would soon play catch-up.


    May 26, 2015

    STI buoyed by regional gains

    SINGAPORE shares ended firmer yesterday, thanks in part to a 3 per cent rally in Shanghai and a seventh day of gains for Tokyo.

    Reflecting the heavy play on lower liners, the shares traded in Singapore were worth just $563.6 million - the lowest this year, with 1.78 billion shares traded.

    The Straits Times Index of 30 blue chips rose 10.67 points or 0.31 per cent to 3,460.85.

    "All the action was in China as we saw a big uptick today. And Japan rose too," said Nicholas Teo, analyst at CMC Markets.

    He noted that industrial stocks in China have surged and wondered if China stocks traded here, known as S-chips, would soon play catch-up.

    The FTSE ST China Index rose 2.61 points or 1.03 per cent to 256.73. The index consists of companies listed on the Singapore Exchange (SGX) which have a majority of their sales from or operating assets located in China.

    Adding to the not-so-hot economic outlook for Singapore, dealers say, was last month's consumer price index (CPI), which fell for the sixth straight month.

    The inflation figure recorded its biggest year-on-year drop in five years last month, which led to some market talk of a possible Singapore monetary easing down the road if the economy were to slow.

    The CPI eased 0.5 per cent last month, after posting a negative 0.3 per cent reading in March.

    The soft inflation number weakened the Singapore dollar, as the currency fell below the psychological floor of 1.34 to the US dollar.

    Economist Barnabas Gan at OCBC Bank said that despite last month's data, the bank is maintaining its headline and core inflation forecasts at zero per cent and 1.1 per cent, respectively, for the year.

    It expects "that lower CPI will likely be isolated in the first half of this year", pointing out that oil prices have been steadily rising since March and, with the dry-weather pattern El Nino "a certainty in 2015", that could push up food prices.

    Among a small band of hot stocks, Yuuzoo was again the most active, surging 13.6 per cent to 33.5 cents. It jumped 31.1 per cent on Friday.

    The social networking and e-commerce firm told SGX last week that Britain-based Edison Investment Research has initiated coverage on the company. Edison said Yuuzoo could be worth as much as $1.83 a share as it moves away from its business-to-business model into the business-to-consumer market.

    Property developer Frasers Centrepoint yesterday listed its seven-year retail bonds, its first retail bond offering. The bonds closed at 1.005 per cent of par.