Feb 11, 2014

    STI claws its way back into the black

    A LATE rally allowed local shares to end in the black yesterday, after languishing in the red for most of the day.

    The Straits Times Index climbed 4.06 points or 0.13 per cent to 3,017.20 - the third straight day of gains following a steep sell-off that sent stocks down 3 per cent in five days.

    Indices comprising largely penny stocks, such as the FTSE ST Catalist, FTSE ST Small Cap and FTSE ST Fledgling, fell between 0.3 per cent and 0.8 per cent.

    Most major regional indices started the week on a positive note but, while the rises in recent days are welcome, the mood remains cautious as risks remain.

    Japan's Nikkei 225 climbed 1.8 per cent and the Shanghai Composite was up 2 per cent, but the Hang Seng in Hong Kong bucked the general trend, falling 0.3 per cent.

    The gains were partly led by Wall Street's positive outing on Friday as investors snubbed a weaker-than-expected jobs report and opted to focus on some upbeat corporate earnings.

    The S&P 500 rose 1.3 per cent while the Dow climbed 1 per cent.

    On Friday, the Monetary Authority of Singapore and the Singapore Exchange proposed steps to strengthen the market, such as disallowing contra trades unless they are backed by collateral and setting a price floor for shares of mainboard-listed firms.

    Dealers expect these measures, which follow a penny stock rout in October, to dampen trading volumes, which are already at uninspiring levels.

    SGX, which fell seven cents or 1 per cent to $6.72, also said on Friday that it will cut clearing fees and remove the cap on fees for big trades, a move which DBS Group Research said would be "broadly neutral" on revenue.

    Gains here were led by Genting Singapore, which jumped 2.5 cents or 1.8 per cent to $1.415. The casino operator said it plans to develop a US$2.2 billion (S$2.8 billion) casino resort on South Korea's Jeju Island.

    CIMB Research said the move indicates that the company is aggressively venturing into new markets, which could be a key catalyst.

    SIA Engineering advanced six cents or 1.3 per cent to $4.75 while OCBC Bank rose seven cents or 0.8 per cent to $9.37.

    Yesterday's lift comes amid a dismal start for the Singapore market this year, with shares down 4.7 per cent.

    Phillip Capital pointed out that macro headwinds suggest a weak, muted or range-bound market ahead and pessimism over the medium term. As the market appears oversold from a technical stance, this could imply a short bounce awaits the index.

    The research house is bullish about the local market in the longer term due to Singapore's economic fundamentals.