Business

Local market rides on US stocks' rally

Banking shares in S'pore gain on the back of renewed optimism in Trump administration

Renewed optimism in the new year about the incoming Trump administration helped Singapore shares extend its gains on the second trading day of this year.Led by a rally in the three banking stocks - OCBC, DBS and UOB - the benchmark Straits Times Index (STI) clocked 22.34 points or 0.77 per cent higher to finish at 2,921.31 yesterday, after retreating from an intra-day high of 2.932.35.

Despite the weak turnover of almost 2.3 billion units worth $967 million, trading was firm with gainers outnumbering losers 280 to 151, excluding warrants.

The local market's performance came on the back of the US stocks' rally overnight, in their first session for the new year.

This came as investor sentiments were cheered by the prospects of tax cuts, regulatory reform and other initiatives.

On Monday, Wall Street edged up, with the S&P 500 rising 0.9 per cent, as investors took comfort in data showing an improvement in activity in the US manufacturing sector.

Adding on to that upbeat mood was the greenback hitting a 14-year high.

Within the region, Australia's S&P/ASX 200 ended yesterday's session up 0.06 per cent at a 19-month high, while the Nikkei 225 index rose sharply by 
2.5 per cent to a 13-month high.

Over in China, the benchmark Shanghai Composite Index closed 0.7 per cent higher.

But Hong Kong's Hang Seng Index ended 0.1 per cent lower yesterday.

Back home, the combined gains of index movers OCBC, DBS and UOB added 11.6 points to the STI.

OCBC added $0.12 to end at $9.10 on a volume of 5.1 million, DBS went up $0.20 to close at $17.52 on a volume of 3.8 million, while UOB finished the day's trade at $20.62, up $0.21, with almost 2.8 million shares changing hands.

Some oil- and gas-related stocks, such as Ezra, Mermaid Maritime and Ezion, ended the day in the green and were among the most active counters, following news that top exporter Saudi Arabia was expected to raise prices for its crude as part of planned supply cuts.

Also active was Genting Singapore, whose counter rose $0.035 to close at $0.91 on a volume of 33 million shares.

It had said that it has completed the disposal of its stake in an integrated resort in Jeju, South Korea, where the total sum received by the group was US$411.1 million ($593 million).

Separately, oil and gas engineering services provider AusGroup yesterday replied to a Singapore Exchange (SGX) query on why it did not comply with the Code of Corporate Governance guideline, which requires named disclosure of the individual director and chief executive's renumeration.

"Given the sensitivity and confidentiality of remuneration matters, the board is of the opinion that it is in the best interest of the company not to disclose the remuneration of each individual director and the CEO on a named basis in the FY2016 annual report," the group said.

On the broader outlook, rising nominal growth, wages and inflation accelerating globally this year led by the US would be a central theme.

Mr Richard Turnill, managing director and global chief investment strategist for BlackRock, said in his global weekly commentary: "With inflation taking root and growth picking up, we believe bond yields have bottomed, and yield curves are likely to steepen further in 2017."

He added that BlackRock favours emerging market equities, given the structural reforms, improving profitability and low valuations.

However, a sharp rally in the US dollar or significant changes to trade agreements are risks.

"We see earnings growth and further rotation into big sectors, such as financials, underpinning a US stock market advance in 2017, but we are cautious in the near term after large inflows and new record highs," he added.

This article appears in The Business Times today. For full listings of SGX prices, go to http://btd.sg/BTmkts

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