Aug 06, 2014

    STI recovers, on cue from Wall Street

    MARKET punters here again took their lead from Wall Street yesterday, driving the local bourse back into positive territory after the Dow Jones Industrial Average rallied on Monday.

    The local benchmark Straits Times Index gained 9.27 points, or 0.28 per cent, to close at 3,327.67, a modest recovery after a slip at the start of the week.

    But it was enough of a rise to make the STI an outperformer in the region on the Dow Jones' 0.46 per cent increase. Other regional bourses mostly ended in the red on weak economic data out of China.

    A HSBC report out yesterday showed that the performance of China's services sector fell to a record low last month.

    Tokyo dropped 1 per cent, Shanghai fell 0.15 per cent, Seoul lost 0.68 per cent and Sydney declined 0.4 per cent.

    Hong Kong rose 0.2 per cent.

    The poor China services data followed the release of manufacturing figures last week, which showed that the sector had expanded last month at the fastest pace in over two years.

    "You'd think they would move in tandem, but it's going in the other direction," noted Pauline Dan, the Hong Kong-based head of Greater China equities at Pictet Asset Management, in an interview with Bloomberg.

    "Momentum traders and investors who are looking to take profit in the short term will use that as an excuse to sell."

    Banking shares here were mixed after OCBC released its second-quarter results yesterday, the last to do so for the reporting season.

    DBS Group Holdings rose 20 cents to $18.32 and OCBC gained 10 cents to $9.96, but United Overseas Bank slid 14 cents to $22.80.

    Sembcorp Marine declined seven cents to $4.03, after announcing on Monday that its net profit for the second quarter had risen 5 per cent from the same period a year earlier to $132 million.

    CIMB Research analyst Lim Siew Khee yesterday kept her "hold" call on the stock, saying that while the results were in line with analyst expectations, there are a few potential catalysts that could drive up the stock price.

    Riverstone, a Malaysia-based manufacturer of cleanroom and health-care gloves, was flat at 93 cents after posting an 11.3 per cent rise in its second-quarter net profit to RM16.1 million (S$6.3 million).

    DMG & Partners Research analyst Edison Chen reiterated his "buy" call on the stock, saying that he was confident that the company's newly built facility would be fully utilised once it was ready, given the firm's strong niche in producing high-end cleanroom gloves and highly-customisable health-care gloves.