Asian markets at highest in 10 years
China, oil prices and Wall Street work together to drive regional equities rally
The promise of a rosy growth for China at a pace of 7 per cent and a jump in oil prices drove a regional equities rally yesterday, following Wall Street gains over the weekend.
CMC Markets Singapore analyst Margaret Yang said Asian markets climbed to their highest level in nearly 10 years, led by Tokyo's Nikkei, Hong Kong's Hang Seng and India's Nifty indices. Positive sentiment from the US market also paved the way for a higher opening in Asian futures in the morning, she added.
The rally in the day continued for most across the region, with the Nikkei ending yesterday at a 21-year high, the Hang Seng rising to almost a 10-year high, South Korea's Kospi closing at a fresh record, Australia's S&P/ASX 200 index at a five-month high and New Zealand stocks marginally up.
Bucking the trend was the Shanghai Composite Index, which shrugged off China's upbeat growth forecast, while Malaysian shares also ended the day slightly lower.
Like most regional indices, the Straits Times Index (STI) yesterday extended gains from last week, adding 3.95 points, or 0.12 per cent, to push through to 3,323.06, even though UOB and DBS clocked a combined loss of 3.5 points, among other laggers.
Turnover for the day came in at 1.8 billion units valued at $1.1 billion - better than the hovering average of around 1 billion units traded. Excluding warrants, gainers outnumbered losers 252 to 206.
Shares of Thai Beverage topped the market movers list, adding over 2 points to the STI.
This was after RHB Research kept a "buy" call on the stock with a target price of $1.12 and the company's recent restaurant acquisitions and diversification into Myanmar.
The counter closed at $0.96, up 2 cents on a volume of 44.9 million, making it one of the most actively traded.
Ahead of Keppel Corporation's earnings on Thursday, the company's shares rose 6 cents to $7.13 on a volume of 8.3 million. This was after CIMB this month upgraded the stock to an "add" rating and raised the target price to $8.58, saying "the worst could be over" for the offshore and marine player.
The broker expects Keppel to ride the bottoming offshore and marine cycle and the upturn of the residential market with its early landbank inventory.
Energy stocks made it to the actives list after oil prices climbed over renewed US sanctions against Iran. Crude prices have also risen as clashes between Iraqi and Kurdish forces broke out south of the oil-rich city of Kirkuk.
Ahead of tomorrow's closely awaited 19th National Party Congress, China's September consumer inflation number released yesterday arrived at 1.6 per cent year-on-year, in line with market expectations, said IG analyst Jingyi Pan.
"The notable release had been the upside surprise in producer price index at 6.9 per cent year-on-year, coming in at a five-month high. The surge follows in the footsteps of positive September economic indicators arriving out of China, highlighting robust demand," she said.
DBS chief economist Taimur Baig said the "current dynamic of modest growth, low inflation, and easy liquidity has left investors so comfortable that the market is hardly pricing in geopolitical risks, despite rising tensions and uncertainties".
"Last year's fiscal stimulus and this year's surprise upturn in global demand have helped China; but sorting through the various structural impediments while delivering strong growth will remain a daunting challenge," he said.
"After the October Party Congress, the pace of adjustment, especially with respect to SOEs (state-owned enterprises), could become more disruptive, bringing back some of the stresses seen in 2015 and 2016."
This article appears in The Business Times today. For full listings of SGX prices, go to http://btd.sg/BTmkts