May 30, 2014

    STI rides high as region flounders

    SINGAPORE stocks closed at a one-year high yesterday, even as many regional bourses ended the day in the red.

    The benchmark Straits Times Index rose 28.87 points, or 0.88 per cent, to 3,300.71.

    Much of the buoyant mood was thanks to SingPost, which surged to an all-time high after announcing on Wednesday that Chinese e-commerce giant Alibaba was taking a 10 per cent stake in it.

    The national postal services firm soared 13 cents, or 8.4 per cent, to $1.68.

    Most analysts are positive about the deal, with CIMB Research analyst Jessalynn Chen noting that the injection by Alibaba will give SingPost a new source of funding that can open its doors to new investment opportunities in e-commerce logistics regionally.

    She added: "SingPost will benefit from tremendous business volumes originating from Alibaba's e-commerce businesses, and the enlarged scale of the business will bring cost efficiencies, giving SingPost leverage over its competitors in a price-competitive Asean market."

    It was a starkly different picture across much of the region, where most bourses fell.

    Hong Kong slipped 0.3 per cent, Shanghai lost 0.47 per cent, Seoul dropped 0.24 per cent and Sydney slid 0.14 per cent.

    Tokyo, however, eked out a small gain of 0.07 per cent.

    Mark Matthews, the head of Asia research for Julius Baer, told Bloomberg: "Valuations in Asia look attractive, with those for Chinese equities incredibly low. Japan has become pretty cheap, too."

    Noble Group was another big winner at home, rising 3.5 cents, or 2.6 per cent, to $1.40.

    Fellow commodity player, Golden Agri Resources, added 1.5 cents to 58.5 cents, while Wilmar International was flat at $3.24.

    Offshore and marine stocks were mixed, after DMG & Partners Research highlighted its preference for players in the shallow- water market, which carries lower risk than the deepwater segment.

    Nam Cheong fell half a cent to 38.5 cents, Pacific Radiance slipped 1.5 cents to $1.22, MTQ rose a cent to $2.15, Sembcorp Marine gained four cents to $4.10 and Ezion was flat at $2.19.

    Q&M Dental Group lost half a cent to 48 cents.

    The company had said on Monday that it was selling a 10 per cent stake to private equity firm Heritas Helios Investments (HHI) for 48 cents a share.

    "The fact that HHI is willing to pay full market price, achieved prior to last Thursday's trading halt highlights the confidence it has in Q&M," Maybank Kim Eng Research said in a report on Tuesday.