Jan 09, 2015

    STI gains on news of Wall Street rally

    LOCAL investors took their cue from the rally on Wall Street overnight to send shares higher for the second straight day.

    The gains were far more robust than those on Tuesday, with the benchmark Straits Times Index (STI) surging 1.42 per cent or 46.75 points to 3,345.11.

    The rise followed a 1.23 per cent increase on the Dow Jones Industrial Average on news of better business hiring in the United States last month and a slight recovery in oil prices.

    Banking stocks again became investors' favourite picks. OCBC, the day's top gainer, was up 3.14 per cent or 32 cents to $10.50.

    United Overseas Bank added 2.47 per cent or 58 cents to $24.02, while DBS jumped 1.41 per cent or 28 cents to $20.08.

    The local banks are set to enjoy a windfall as interest rates are already on the rise, with the 12-month Singapore Interbank Offered Rate jumping from 0.55 per cent to 0.67 per cent in just the first two days of this week.

    "DBS chief executive Piyush Gupta has estimated that a 1 percentage point increase in the interest rate is expected to add an estimated incremental profit of $800 million to the company's bottom line," Lim & Tan Securities said in a note yesterday.

    "OCBC and UOB have less savings and current accounts but we believe both banks could still benefit with incremental profits of $400 to $500 million," the note added.

    The day's star performers also included Global Logistic Properties, which closed 1.65 per cent or four cents higher at $2.46.

    The firm reported yesterday that it has signed four new lease agreements in Greater Tokyo.

    In the volatile oil and gas sector, Keppel Corp rose for the second day, up 1.44 per cent or 12 cents to $8.47.

    Analysts continue to favour the offshore marine player for its stable order-book outlook, with OSK DMG analyst Lee Yue Jer forecasting in a recent note that it will win around $6 billion in orders annually.

    On the other side of the ledger, CapitaMall Trust was the biggest loser, falling by 2.4 per cent or five cents to $2.03, as investors took profit after the counter closed on Wednesday at its highest price since June 2013.

    ComfortDelGro also dropped, falling 0.39 per cent or one cent to $2.57. StarHub closed at $4.09 after losing 0.24 per cent or one cent.

    Elsewhere, most Asian markets ended on a strong note on the back of better news abroad. Tokyo went up 1.67 per cent, rising the most among its major peers.

    Toshihiko Matsuno, Tokyo chief strategist at SMBC Friend Securities, told Reuters: "Sentiment is supported by overseas developments and investor concerns have eased for now."