Business

STI climbs to end four-day slide

Positive Wall Street lead, upbeat data from Japan and China spread cheer to Singapore stocks

Having drowned in red ink for much of the week, Singapore stocks managed to get some air on Friday with the key barometer closing higher alongside most of its regional peers, thanks to a positive showing in Wall Street and upbeat data from Japan and China.

The Straits Times Index was nowhere close to being on fire like the bitcoin, but it was still a pleasant end to the lull that the bourse was caught up in for the first four trading days of the week, when it was bogged down by volatility in US stocks and a lack of fresh leads amid profit-taking opportunities.

The Straits Times Index jumped 36.5 points or 1.1 per cent to finish at 3,424.64 on Friday.

The gains, however, were not enough to push the index into positive territory for the week with the STI losing 24.9 points or 0.7 per cent week on week.

Other Asian bourses also saw gains across the board yesterday ahead of the release of key US jobs data.

Adding to the positive sentiment was optimism over US tax reforms.

Market risk was also averted after the US Congress bought more time for protracted talks to keep the US government open by passing a funding stop-gap measure until Dec 22.

Data out of Japan showed the economy expanded at an annualised 2.5 per cent in the third quarter, an improvement on an earlier estimate, and a signal that it has finally returned to steady growth after a prolonged slump.

More encouraging news came out of China, which reported strong growth in both exports and imports last month.

Until markets start to price in excessive earnings growth, and confidence and trust are impacted by policy mistakes, markets should trade higher into 2018.DBS Research

In an outlook report, DBS Group Research said it expects Asian equities to deliver gains yet again next year as a global recovery scenario should continue to boost earnings, which has been the key driver of valuations in Asian markets this year.

It expects gains in Asian markets to be more broad-based now that there is greater confirmation of and confidence in the central banks' programme of balance-sheet reduction.

"The Asian growth story remains intact," said DBS Research. "Event risks arising from geopolitical conflicts, European elections, noise from the Trump administration, and central banks' tightening policies could sap risk appetite but they won't be enough to derail the upward momentum.

"Until markets start to price in excessive earnings growth, and confidence and trust are impacted by policy mistakes, markets should trade higher into 2018," DBS added.

Banks led gains in the local bourse with DBS Group climbing 60 Singapore cents or 2.5 per cent to $24.84. United Overseas Bank rose 25 Singapore cents or nearly 1 per cent to $25.88, while OCBC Bank gained 27 Singapore cents or 2.2 per cent to $12.39.

Phillip Capital maintained its "accumulate" rating on the banks on the premise that all indicators such as volume, margins and asset quality point to a healthy fourth quarter for the banking sector. It also added that valuations of Singapore banks continue to be undemanding at between 1.1 and 1.2 times price-to-book value.

ComfortDelGro fell three Singapore cents or 1.5 per cent to $1.91. It finally released details of its alliance with Uber Technologies after market close and announced that it will acquire a 51 per cent stake in Uber's car rental subsidiary, which has a fleet of 14,000 vehicles.

Valued at about $642 million, with a cash consideration of $295 million, it ranks as ComfortDelGro's largest deal to-date.

For full listings of SGX prices, go to btd.sg/BTmkts

BUSINESS & FINANCE