Business

STI breaches 3,300 - first time in 2 years

Blue-chip benchmark closes 8 points higher with 2.68 billion shares traded

The Straits Times Index (STI) firmly crossed the 3,300 threshold yesterday, after flirting with the line for much of the last two trading sessions.

It is the first time in two years that it has reached that point. The blue-chip benchmark closed the day at 3,306.08, up 0.24 per cent or 7.84 points from the previous session.

A total of 2.68 billion shares were traded yesterday, representing $1.3 billion in value. Gainers outnumbered losers 244 to 199.

The advances made by the STI were in tandem with gains in Hong Kong and among Chinese stocks, which received a boost from better-than-expected Chinese gross domestic product data.

The Hang Seng Index rose 0.21 per cent, while the Shanghai Stock Exchange Composite gained 0.35 per cent. Japan's Nikkei 225, however, slipped 0.59 per cent in its re-opening following a three-day weekend.

In Singapore, Global Logistic Properties, which has been hotly traded in recent sessions on the back of a buyout bid by a Chinese consortium, remained among the most active stocks.

Before the opening bell, it said it had signed an agreement with Adidas to develop the sportswear manufacturer's largest distribution centre in Asia. This lifted its shares to $3.33, up two cents or 0.6 per cent from the previous close, though below the offer price of $3.38 a share.

Another active stock was Singapore Press Holdings, which fell below $3 for the first time since 2009. Some 21 million shares exchanged hands, representing more than four times its average three-month volume of 4.8 million.

The media and property group last Friday reported lower third-quarter earnings on poorer results from the media segment and magazine business.

OCBC Investment Research on Monday said the quarter's results missed its expectations; it has a "hold" call with a fair-value estimate of $3.25.

Construction and engineering company Ley Choon Group was also among the most actively traded yesterday.

The stock gained 0.3 cent or 5.4 per cent to close at 5.9 cents; 87.6 million shares - five times its average volume in the past three months - changed hands.

A remisier said the market could be betting that Ley Choon would be in a better position to secure future contracts for road works here, following the accident on OKP's subsidiary worksite last Friday, which killed a worker and injured 10.

Other familiar names in the top actives list included Jadason, Disa and Noble Group.

With the STI having broken 3,300, the next point in sight would be 3,400.

If earnings were to continue to improve alongside a pickup in economic growth and a rebound in commodity prices, the benchmark could challenge its 2015 high in the 3,540 area in the second half of this year, said CMC market analyst Margaret Yang in a morning note.

Meanwhile, a weaker US dollar is giving a boost to precious metal prices. Gold has recovered from its sharp fall in the past two weeks to trade at about US$1,237 (S$1,700) an ounce.

Oanda senior market analyst Jeffrey Halley said: "With the street repricing its US interest rate outlook following soft data and a dovish (Janet) Yellen, and with US President Donald Trump's reflationary reforms seemingly lost in the legislative Bermuda Triangle of Congress, a weaker US dollar should continue to support gold."

OCBC Bank economist Barnabas Gan on July 12 said there is short-term upside risk to gold prices if risk appetite fizzles into the third quarter of this year.

But with central banks tightening policies, gold should fall back to US$1,200 an ounce by the end of the year, he said.

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