May 22, 2015

    STI perks up on US Fed news

    THE local market finally snapped out of its multi-day skid, after the Federal Reserve said a rate hike next month now seems unlikely as uncertainties persist over the United States' recovery.

    Participants in the latest Fed meeting "thought it unlikely that the data available in June would provide sufficient confirmation that the conditions for raising the target range for the federal funds rate had been satisfied'', according to the meeting's minutes released yesterday.

    The US economy grew only 0.2 per cent in the first quarter, while consumer spending rose only 0.4 per cent in March.

    Wall Street enjoyed an intra-day rally following the news, but the gains were wiped off as the Dow Jones Industrial Average ended 0.15 per cent lower.

    Investors breathed a sigh of relief at the Fed comments, but remained aware that a rate hike in the third quarter is still on the cards - the consensus among 50 out of 62 economists polled by Reuters.

    Still, the benchmark Straits Times Index was given enough lift to close 0.18 point or 0.01 per cent higher at 3,439.86, ending its slide since last Friday.

    Palm oil plays Wilmar International and Golden Agri-Resources were among the top-performing blue chips, as investors continued to bet on palm oil futures' rebound. Wilmar gained 11 cents or 3.36 per cent to $3.38, while Golden Agri added 0.5 cent or 1.19 per cent to end at 42.5 cents.

    But the highlight of the day was Global Logistic Properties (GLP), the bourse's most active counter with some 388.62 million shares changing hands while closing eight cents or 2.92 per cent higher at $2.82.

    GLP's turnover also pushed STI's daily trading volume to 592.80 million shares, doubling the volume from a day ago.

    Market watchers told The Straits Times that GLP was likely buoyed by a married deal during the day. A married deal is an off-the-market transaction where a shareholder offloads its shares to a counterparty on an agreed price.

    CMC Markets analyst Nicholas Teo said some 354 million shares - around 7 per cent of GLP's stake - were traded at $2.74 in the deal yesterday morning.

    "This would require a shareholding change announcement on Singapore Exchange within five days. Until that announcement is made, we can only guess who's behind the deal. But looking at the current shareholding, only Blackrock, Lone Pine Capital and GIC have that much to sell."

    As of Wednesday, GIC owned 35.75 per cent of GLP, Blackrock had 7 per cent and Lone Pine had another 7.99 per cent.

    Meanwhile, StarHub dropped the most on the STI, closing eight cents or 1.94 per cent lower at $4.05. This was its fourth day of falls since reporting a 12.4 per cent drop in first-quarter net profit.

    On other markets, Shanghai rose 1.87 per cent to a new seven-year high despite the contraction in factory activity reported for this month. Hong Kong dropped 0.22 per cent, while Tokyo gained a marginal 0.03 per cent after the surge to a 15-year high a day earlier.