Business

Strong start to year for STI, regional markets

STI rises 1.1% to above 3,500 points

Gleeful investors here and across the region latched onto a range of good economic news yesterday to propel shares sharply higher.

The optimistic mood was most evident in Japan, where the Nikkei index shot up 3.3 per cent to its highest close in about 25 years. The spectacular showing was also due to the market catching up with the rest of the world following a long Japanese New Year's holiday.

Another key benchmark - MSCI's broadest index of Asia-Pacific shares outside Japan - rose 0.3 per cent, delivering gains of 2.4 per cent since markets opened this week.

Singapore investors did their part as well, with expectations of higher corporate earnings helping lift the Straits Times Index (STI) above 3,500 points.

The STI rose 1.1 per cent to 3,501.16, capping a remarkable three-day streak that has seen it add almost 100 points. About 2.6 billion shares were traded yesterday worth about $2 billion, figures that dwarfed the anaemic numbers recorded late last year.

Malaysian shares rose 0.6 per cent to 1,803.45 points - the highest close since May 2015.

Traders were spoilt for choice when it came to reasons to pile back into stocks.

High on the list was the positive manufacturing data from the United States and low German jobless figures.

Unrest in Iran helped send oil to its highest since 2015, driving up energy stocks in the process.

Investors seem convinced that the only way is up.

"There is no major steep rise in interest rates, there's strong growth, the economy's on a firm footing, there's no headline risk that will scare you," said Mr Kenneth Tang, senior portfolio manager at Nikko Asset Management.

These are heady days for local investors, with the STI in rarefied territory. The market had traded above the 3,500-point mark only for a few days in April 2015, and before that, only for some months in 2007.

Singapore's market milestone yesterday was achieved with the help of the three local banks, which are now up between 30 and 50 per cent from a year ago.

Mr Victor Wong, senior director of equities at UOB Asset Management, said bank valuations can still improve.

"One thing that excites us is that the three banks are giving more details on their digital strategy. It boils down to cutting costs, being more efficient, and opening markets to higher value-added customers," he said.

The jump in crude prices helped rig-builder Keppel Corp, which added 1.7 per cent, while oil explorer Rex International advanced 5.3 per cent and KrisEnergy, an upstream oil firm, added 1.9 per cent.

Fund managers are also bidding up the prices of a whole host of industrial and tech firms.

Mr Tang said that after the rallies of "early cyclical" stocks like banks and property, he is looking at stocks that will benefit from improved global trade, capital expenditure and even domestic consumption.

"They include global transportation and capital goods stocks", he said.

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