STI closes up after last-minute buying

This article is more than 12 months old

Investors focus on US Federal Open Market Committee meeting where officials will likely raise rates

An eleventh-hour buying activity helped nudge the Singapore bourse's key Straits Times Index to close marginally higher to a fresh 2½-year high, although the writing was on the wall for a correction ahead of a key central bank meeting and Monday's strong gains.

Below water for much of the day, the STI managed to eke small gains in the final minutes to finish 5.09 points or 0.15 per cent higher at 3,465.54.

The gains were led by the three banking stocks as well as rises in Keppel Corp and Singtel.

Sentiment remained edgy ahead of a two-day US Federal Open Market Committee session, the most significant gathering in a week packed with central bank meetings.

Strong overnight lead from US stocks with the Dow and S&P 500 having edged to fresh records was evidently not enough as other key Asian bourses struggled to stay in positive territory.

Key indices in Japan, Hong Kong, South Korea and China closed lower while Australia and Malaysia reaped gains.

Most expect the Fed to hike rates at this policy meeting.

"Since the third rate hike of the year has been well telegraphed by the Fed, and the balance sheet is on autopilot, markets are likely to focus on the fresh set of projections, in particular the dot plot," said Rabo Research.

Singapore released retail sales data, which continued to decline in October from a year ago, although the slowdown was more moderate compared to the decline in the month before.

Year to date, the STI has risen just over 20 per cent, and it may still have room to climb.

According to DBS Group Research, Singapore remains one of the few regional markets where the benchmark index is still trading below the all-time high.


"The valuation still does not look stretched," said DBS, adding that there is potential for the index to challenge its previous high.

The house's optimism is premised on corporate earnings recovery in the city-state this year after two straight years of decline in 2015 and 2016 - a recovery that could be sustained in the next two years.

"While the near-term outlook is challenged by uncertainty over Fed policies, oil prices and global inflation, a tightening bias by MAS should be supportive of the Singapore dollar on a relative basis.

"Strong index performance has correlated with a strong Singdollar in the past," said DBS, adding that the STI could hit 3,688 by the end of next year, representing a 10 per cent total return inclusive of dividends.

Yesterday, turnover in the local market stood at 1.6 billion shares worth $994 million. Gainers outpaced losers with 239 counters up and 172 counters down.

Thai Beverage Public gained 0.5 cent or half a per cent to 95.5 cents.

It was reported that Vietnam Beverage, a unit of ThaiBev, submitted a bid to acquire a stake in Vietnam's largest beer-maker in a deal worth at least US$2.25 billion (S$3 billion).

Catalist-listed Infinio Group found itself on the most actives' pole spot.

The counter jumped 50 per cent to 0.3 cent with 84 million shares worth $235,000 before trading was halted at noon pending the announcement that it has inked an agreement for an unsecured interest-free loan of nearly $3 million.

Noble Group continued to climb for the second straight day, this time by nearly five cents or 34 per cent to 19 cents with 29 million shares done.

The commodities trader said it has completed the sale of a unit dealing in coal sales for US$35 million.

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