Dec 18, 2013

    STI up, thanks to strong Wall Street lead

    A STRONG overnight lead from Wall Street, coming as a key meeting of the United States Federal Reserve drew closer, drove local shares up yesterday.

    The more optimistic mood sent the benchmark Straits Times Index (STI) up 13.8 points or 0.45 per cent to 3,067.57.

    New York shares rose on Monday - the Dow Jones Industrial Average was ahead by 0.82 per cent - after strong manufacturing numbers from the euro zone and the US.

    The robust figures provided a strong lead for the Asia-Pacific region yesterday, sending Tokyo up 0.8 per cent and Sydney, 0.3 per cent.

    But Hong Kong slipped by 0.2 per cent and Shanghai fell by 0.45 per cent.

    The big question in most investors' minds is whether the US Fed will start reducing its massive money-printing programme when its December policy meeting ends today.

    Recent strong jobs data had raised fears that the reduction - known as "tapering" - would be announced today, but analysts point out that US inflation is still falling short of the target.

    The Fed announcement about its meeting is expected before Asian markets start trading tomorrow.

    Gainers here included STI heavyweight SingTel, up five cents or 1.4 per cent to $3.61.

    Rigbuilder Keppel Corp rose 19 cents or 1.8 per cent to $10.81. It announced after Monday's market close that it has secured five contracts worth about $150 million in total.

    That brings the offshore and marine unit's new orders this year to almost $7 billion.

    "We estimate Keppel has a net offshore and marine order book amounting to $15.9 billion, which will give the company strong earnings visibility over the next two years," said DMG & Partners Research.

    "We are forecasting for the offshore and marine division to deliver 6 per cent net profit growth for financial year 2014."

    DMG said Keppel will continue to benefit from the ongoing theme of companies replacing their ageing jack-up rigs.

    It expects Keppel's strong margins to be sustained, given the "favourable product mix" as all the 19 jack-up orders won this year are based on Keppel's own designs.

    DMG has a "buy" call and $12.65 target price on Keppel.

    Volumes continued to be soft across the market. Only $758 million worth of shares changed hands, although that was a slight improvement from Monday's anaemic $687 million.