Jan 17, 2014

    STI fails to latch onto US exuberance

    WHEN Wall Street shines, Asian bourses usually sparkle.

    However, Singapore stocks closed flat yesterday after a lacklustre session despite strong gains in New York overnight.

    The benchmark Straits Times Index (STI) dipped 2.81 points, or 0.09 per cent, to 3,140.44.

    Trading volume was fairly modest, with some 2.5 billion shares worth $885.7 million changing hands.

    A broker said: "The downbeat session came as a surprise. We expected stocks here to fly a little in reaction to Wall Street's overnight rise."

    United States stocks kept up their bull charge on Wednesday, as bank and technology counters soared, regaining most of the ground they lost in their year-to-date slide.

    The S&P 500 index added 0.5 per cent to retake a record level while the Dow Jones Industrial Average gained 0.6 per cent to narrow its year-to-date losses to 0.5 per cent.

    US investor sentiment was boosted by upbeat earnings at Bank of America and news of Apple starting to sell iPhone 5s models via China Mobile.

    "With the advance seen over the last two days, valuations for the US have reached a high of 15.6 times earnings," noted CMC Markets analyst Desmond Chua.

    "While this may seem lofty by historical standards, the careful manoeuvring of (US Federal Reserve) policy should lend support to the equity markets in the medium term."

    Dealers here said the STI's flat display despite Wall Street's exuberance was likely due to the sluggishness of Asian markets.

    Japan fell 0.39 per cent, but Hong Kong rose 0.37 per cent and Australia was up 1.21 per cent.

    Here, 19 of the 30 STI component stocks ended lower, with six higher and five unchanged.

    The losers included Singapore Exchange, which slid eight cents to $7.04.

    It was joined by commodity counters Olam International, down 1.5 cents to $1.535, and Wilmar International, two cents behind at $3.25.

    Maybank Kim Eng said this year looks set to be a year of transformation for commodity traders, with slowing demand from China and a stronger US dollar coming into play.

    The broker added: "We prefer companies with clear catalysts and less likelihood of an earnings miss."

    The gainers included Keppel Corp, up nine cents to $10.94, and CapitaMalls Asia, 1.5 cents in front to $1.905.

    The most active was OEL Holdings, formerly Oakwell Engineering, which said yesterday that it agreed to buy two property-investment firms for $53.9 million. It added 0.1 cent to 12.5 cents on 169.22 million units done.