STI bounces back amid upbeat outlook

Singapore equities made a swift rebound yesterday following slight losses clocked a day earlier, amid higher oil prices, upbeat outlook on the global economies and better performance on Wall Street.

Led by fresh records on Wall Street on Monday night, the benchmark Straits Times Index (STI) retreated from an intraday high of 3,416.73, but added 31.25 points or 0.92 per cent to close higher at 3,413.10 - the highest in 2½ years.

Turnover came in at 2.7 billion worth some $1.4 billion, working out to an average of about $0.52. Trading was firm with the advance-decline score 257 to 184, excluding warrants.

When asked, CMC Markets Singapore's analyst Margaret Yang noted that higher oil prices helped lift energy shares and had alleviated concerns over Singapore's oil and gas sector.

"The STI has also broken out above 3,400 points today, and its next major resistance is 3,547 points - the peak in 2015. This week's big earnings include Singtel and CapitaLand will be closely watched, but downside is pretty much cushioned by cheap valuations. The STI is traded at around 11.7 times price-to-earnings, still among the cheapest in Asian markets," said Ms Yang.

The three lenders added a combined 22.5 points to the STI yesterday, after being weighed down by shares of index heavyweight DBS, which announced disappointing third quarter results. DBS led the gains, closing up 70 cents at $23.49. Shares of UOB rose 37 cents to finish at $25.13, while OCBC climbed 9 cents to $11.81.

Remisier Ernest Lim said the gains in the banking stocks would have been led by the increasing likelihood that the worst of the provisions for the oil and gas sector might be over for the lenders, that the banks benefitted from the increase in loan books as well as a potential rise in net interest margins as interest rates creep higher.

Among the most active counters was Genting Singapore, whose shares went up 3.5 Singapore cents to $1.27 on a volume of 55.7 million. The firm had on Monday posted a 35 per cent year-on-year jump in Q3 net profit to $143.79 million.

Heavy trading was recorded for energy stocks in Singapore, with shares of KrisEnergy and Rex International making gains and moving to the actives list.

Mr Lim pointed out that in line with the rise in oil and gas counters trending up, shares of Keppel Corporation and Sembcorp Marine surged 1.6 per cent and 1.3 per cent, respectively. Keppel Corporation closed up 12 Singapore cents at $7.62 and Sembcorp Marine added 2.5 Singapore cents to finish at $1.98.

In particular, GSS Energy's stock closed 5.1 per cent higher at $0.185 - the highest since April 10 this year. Some 25 million shares changed hands, making it the highest volume since July 20 this year, said Mr Lim.

"It is common knowledge that GSS is drilling for oil. So there may be updates on GSS' oil business division in the next few weeks, that is, whether it manages to find oil. Such an update is likely to be another driver for its share price performance," Mr Lim said.

This strong showing from energy stocks came on the back of the anti-corruption crackdown in Saudi Arabia that has triggered a spike in oil prices, which surged from US$60.02 a barrel last Thursday to US$64.27 on Monday - the highest level since June 2015.

Across the region, fresh milestones were hit, fuelled by higher oil prices and general optimism. Tokyo's Nikkei, Hong Kong's Hang Seng, Malaysian and Australian shares all ended higher. Bucking the upward trend was Seoul's Kospi which ended the day slightly lower while New Zealand shares ended the day unchanged.

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