Jan 08, 2015

    STI recovers despite oil, euro zone fears

    THE local market yesterday recovered some of the losses from Tuesday's rout, despite the ongoing free fall in oil prices and signs of a fresh euro zone crisis.

    The benchmark Straits Times Index (STI) closed 16.41 points or 0.5 per cent higher at 3,298.36, after briefly touching an intra-day high of 3,309.80. The Dow Jones Industrial Index had fallen 0.74 per cent overnight.

    The top gainer among STI component stocks was Hongkong Land Holdings which continued its climb this year with a 4.81 per cent or 33 US cents increase to US$7.19 - its highest level since May 2013. Thai Beverage rose 3.65 per cent or 2.5 cents to close at 71 cents.

    Investors also returned to the resilient banking plays, the largest component of the index.

    United Overseas Bank gained the most, by 0.52 per cent or 12 cents to $23.44. OCBC rose by 0.2 per cent or two cents to $10.18. DBS Group Holdings, however, closed 0.15 per cent or three cents lower at $19.80 as the result of a late sell-off.

    Keppel Corp was another standout, having eked out a 0.36 per cent or three cent rise to close at $8.35 after an announcement yesterday that its subsidiary Keppel Singmarine has secured two contracts worth $65 million.

    But the outlook for oil and gas plays, along with the broader market, remains questionable as oil prices keep falling, with Brent futures losing almost 10 per cent in the first two days this week.

    Dominic Rossi, global chief investment officer of equities at Fidelity Worldwide Investment, said short-term volatility will persist, but counselled calm.

    "A collapse in oil and commodities generally effects a re-distribution of wealth from commodity- producing to commodity-consuming countries," he said. "Therefore, we should consider this to be a material tax cut for both the US and European economies. The equity markets will soon refocus their attention on the benefits of falling oil prices."

    Meanwhile, Olam International lost three cents or 1.47 per cent to $2.01, followed by ComfortDelGro which dropped three cents or 1.15 per cent to $2.58.

    Outside the STI, JES International was queried by the Singapore Exchange (SGX) as its shares surged 17.65 per cent by noon.

    The Chinese shipbuilder - which reported in November a 29.9 per cent on-year revenue drop for the quarter ended Sept 30 - said it was not aware of reasons for the unusual trading activity. SGX has issued a trade-with-caution warning.

    Elsewhere, most major markets in Asia also posted gains. Tokyo added just 0.01 per cent, while Hong Kong rose 0.83 per cent. Shanghai also rose for the fourth day by 0.67 per cent, with PetroChina's 6 per cent rally providing a huge boost to the index, which is now at its highest level in five years.