Dec 18, 2014

    STI rebounds as investors go for bargains

    BARGAIN hunting in the beaten-down oil and gas sector helped fuel a rebound in local shares yesterday, following Tuesday's dramatic sell-off.

    The benchmark Straits Times Index gained 12.14 points to 3,227.23, with 1.2 billion shares worth $1.3 billion changing hands. Rig builders were among the big winners.

    Sembcorp Marine jumped 9.3 per cent or 27 cents to $3.16, while Keppel Corp gained 3 per cent or 24 cents to $8.22.

    But investors are concerned that the United States Federal Reserve, which was due to release its monetary policy overnight, may raise interest rates sooner rather than later, on the back of a robust jobs report last month.

    "Improving employment data may take precedence over rising global turmoil and even US deflation concerns due to collapsing oil prices," remisier Alvin Yong said.

    Stan Shamu, Melbourne-based market strategist at IG, said in a note yesterday: "The challenge (for the Fed) will be how to proceed given the backdrop of turmoil in the rest of the world."

    The wait-and-see approach of many investors as well as uncertainty set the stage for bargain hunters, who homed in on several oil-related local plays, many of which are trading below book value in the wake of the oil slump.

    Ezra Holdings - which went ex-bonus on Tuesday, offering one share for 25 shares - closed up 1.9 per cent or one cent to 52.5 cents. Typically, after a post-bonus issue, share prices would go down to account for the increased number of shares in the market, Mr Yong said. "But in Ezra's case, despite going ex-bonus, its price went up because it was still considered cheap."

    Ezion Holdings jumped nearly 5 per cent or five cents to $1.07, while offshore support vessel provider PACC Offshore Services Holdings rose 3.8 per cent to 54.5 cents.

    News that City Developments Limited (CDL) will raise $1.5 billion through an investment instrument linked to its Sentosa Cove properties sent the counter up 14 cents to $9.84. DBS Equity Research upgraded its call on CDL to a "buy" yesterday.

    An increase in volatility sent Singapore Exchange stock up 2 per cent or 15 cents to $7.54, with nearly four million shares traded.

    "When daily turnover goes past $1 billion strongly, investors will sit up and take notice. But whether it can be sustained is another story," Mr Yong said.

    Palm oil counters Golden Agri-Resources and Noble were among the most actively traded, as deflation concerns amid a slowing global economy weighed on commodity prices.