Dec 03, 2014

    STI rebounds after oil shock

    STOCK markets across the region regained ground yesterday amid a turnaround in energy-related stocks after being battered by plunging oil prices.

    The local benchmark Straits Times Index did not miss out on the rebound, rising 16.68 points, or 0.5 per cent, to 3,322.32.

    OCBC Investment Research noted yesterday that the STI's gain of 4 per cent so far this year "appears feeble compared to the over 20 per cent gains for several key markets".

    "However, this is still remarkable on the back of a prolonged five-year upcycle," it added.

    The global economic outlook is softer next year, and this is likely to generate some uncertainty for corporate earnings and growth outlook, the brokerage said.

    Regional bourses also ended in positive territory yesterday.

    Tokyo added 0.42 per cent to close at a seven-year high, Sydney jumped 1.41 per cent, Seoul ended flat, edging up 0.61 point, while Hong Kong advanced 1.23 per cent and Shanghai soared 3.11 per cent.

    Most oil and gas stocks at home rebounded after falls of 5 to 16 per cent on Monday.

    Ezion Holdings rose 5.5 cents to $1.17, Ezra Holdings gained 1.5 cents to 60 cents, Sembcorp Marine gained four cents to $2.99 and Nam Cheong added 2.5 cents to 36 cents.

    Giken Sakata edged up half a cent to 28.5 cents and Pacific Radiance climbed four cents to 83 cents.

    But Keppel Corp slipped three cents to $8.53, while Marco Polo Marine was flat at 28.5 cents.

    DMG & Partners Research noted yesterday that it expects oil prices to fall 15 per cent more at most in the near term.

    "The market's fear is palpable, creating a positive environment for mid-term returns for investors who can ride out the volatility," wrote analyst Lee Yue Jer.

    "We continue to like selected Singapore oil and gas stocks that entered this correction with starting valuations already low, which have since become 35 per cent lower."

    Its top picks from the sector are Giken Sakata, Nam Cheong, Pacific Radiance and Marco Polo Marine.

    Banking stocks were mixed.

    The Singapore Exchange noted in a report yesterday that finance stocks were the top gainers last month among all the sectors, with the FTSE ST Financials index rising 3.9 per cent.

    DBS Group fell five cents to $19.52, OCBC Bank rose 17 cents to $10.39 and United Overseas Bank was flat at $23.85.