China stimulus news sparks STI climb
Nearly all 30 constituents close higher yesterday; Ezion Holdings and Genting S'pore among heavily traded counters
After unexpected misses in Chinese trade data scared investors into retreat on Monday, the Chinese government swept cheer back into markets yesterday with indications that it will inject stimulus into its economy to counter growth pressures.
The National Development and Reform Commission said that it aims to achieve "a good start" in the first quarter, and senior economic policy officials announced tax cuts, especially for small businesses and the manufacturing sector.
Mr Zhu Hexin, deputy governor of the People's Bank of China, told reporters that China will avoid a "flood" of liquidity and instead maintain a stable macro-leverage ratio.
Singapore's Straits Times Index (STI) climbed steadily yesterday, to end 38.84 points or 1.22 per cent higher at 3,212.30.
Trading on the bourse amounted to 1.6 billion securities worth $1.17 billion, which worked out to a unit price of $0.73. Advancers outnumbered decliners 252 to 157, or about eight securities up for every five down.
Nearly all 30 STI constituents closed higher, led by counters involved in the $11 billion deal between CapitaLand and Ascendas-Singbridge. Ascendas Real Estate Investment Trust (Reit) climbed 1.84 per cent or 5 Singapore cents to $2.73 with 28.9 million units being traded; CapitaLand, CapitaLand Commercial Trust and CapitaLand Mall Trust added between 0.3 and 0.6 per cent each.
The only STI counters that did not end in the black were ComfortDelgro, which closed flat at $2.14, and Jardine Matheson Holdings and Jardine Strategic Holdings, both of which ended lower.
Financials were boosted by Wall Street giant Citibank's fourth-quarter results in the US on Monday. While the bank missed analysts' estimates for revenue, it beat profit expectations, soothing investors' concerns about earnings and a slowdown in the global economy, CNBC's Jim Cramer said.
"If Citigroup is right - that the only real fear here is the fear that we'll talk ourselves into a recession - then this earnings season could turn out to be a whole lot more positive than most people seem to be expecting," he said on his Mad Money show.
In Singapore, the most actively traded counter was Ezion Holdings, which saw 82.7 million shares change hands in the session. Shares of the liftboat owner and operator closed at $0.049, up 0.1 Singapore cent or 2.08 per cent.
Another heavily traded stock was Genting Singapore, which picked up 4 Singapore cents or 3.88 per cent on volume of 68.2 million.
Shares of Vallianz Holdings retreated 0.2 Singapore cent or 20 per cent to $0.008, with 12.8 million shares traded. This followed the company's announcement late on Monday that a vessel managed by its subsidiary Vallianz Offshore Marine had been damaged by a collision with a tanker on Jan 13.
Vallianz said no material financial impact will arise from this incident, and that its business operations are continuing as normal.
The Singapore market is unlikely to be immediately impacted by the outcome of the UK parliament's vote on the Brexit deal, which was scheduled to take place early this morning, but FXTM research analyst Lukman Otunuga cautions that there are long-term effects to consider.
"A negative outcome to Brexit that is followed by prolonged uncertainty is expected to weaken the British pound considerably.
"This is bad news for Singapore, especially when considering how British companies may start to hold off investment in manufacturing due to currency weakness and unfavourable conditions at home," he said.
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