Asian markets rally for second day on Fed hike hold, STI ends 27 points up

SINGAPORE - The rally continued for the second day across most Asian markets Friday after the Federal Reserve held rates steady, pushing the local shares above the levels seen before the January crash.

The benchmark Straits Times Index put on 26.63 points or 0.92 per cent to 2,906.80, its highest since November. A healthy S$1.54 billion worth of shares were traded in the market yesterday, partly on the back of more global funds flowing into the regional markets.

For the week, the STI rose 2.8 per cent, higher than the 2.3 per cent gain by the regional index MSCI Asia ex-Japan.

But while the market confidence has improved, not all are convinced that the rally will hold up. Remisier Desmond Leong said his clients are showing an improved appetite, but prudence is still key.

"In the near term I think 2,950 is possible, but I think there will be a strong resistance around 3,000. Expect more consolidation from now because we're not going to slice through easily," he told the Straits Times.

"My advice to my clients is to buy blue chips, which will at least give stability in dividend beyond the near term."

As many as 21 blue chips ended higher on the 30-stock STI. Banks again led the gainers, with OCBC closing up 18 cents or 1.98 per cent at S$9.27 and DBS up 28 cents or 1.78 per cent to S$16.02. United Overseas Bank rose less, up by six cents or 0.31 per cent to S$19.29.

Property plays were also among the investors' favourites in this ongoing rally due to their low valuations, and City Developments Limited (CDL) went up 18 cents or 2.35 per cent to S$7.85. The developer was given a buy call by CIMB analyst Lock Mun Yee, with a target price at S$10.32.

"Valuations are attractive, with a price to book value ratio at 0.76… Meanwhile, we foresee that Capitaland and CDL would be the least impacted from Qualifying Certificate penalties," Ms Lock said, referring to the hefty regulatory fees a developer must pay if a private residential project is not fully sold in two years after completion.

CapitaLand - another property giant on the STI - was however STI's losers, dropping two cents or 0.63 per cent to S$3.17. Thai Beverage pared for the second day, down half a cent of 0.68 per cent to 73 cents.

whwong@sph.com.sg