Bulls and bears

Asia bullish as post-Brexit rally continues

Analysts still watchful even as bourses extend gains following Wall St's overnight rebound

Bullish Asian markets continued their post-Brexit rally but analysts are not yet convinced that the coast is clear. Regional bourses took their cue from the 1.64 per cent increase on Wall Street overnight.

Singapore's benchmark Straits Times Index added 48.2 points or 1.73 per cent to 2,840.93, in a lively session that saw $1.7 billion worth of shares changing hands.

Hong Kong rose 1.75 per cent, Tokyo weakened through the day but was still up 0.06 per cent while Kuala Lumpur put on 0.72 per cent. Shanghai was down 0.07 per cent. However, London's FTSE 100 opened weakly before rising by 0.2 per cent by noon while the sterling stayed range-bound around 1.34 against the greenback.

"While global indices have recovered markedly, the pound is still weak, which suggests that investors are buying back equities, not because they feel sanguine about Britain," IG market strategist Bernard Aw said.

OCBC investment research head Carmen Lee is also cautious: "Volatility is likely to remain in the market due to a couple of factors, including the impact of the Brexit on the rest of Europe and on Britain, and slower global economic growth.

"As of now, it looks like there is a growing probability of no hike for this year and even expectations from some economists of a cut in (United States) interest rates. And then there's the US presidential election at the end of the year. This will continue to add to the uncertainty in the market," she said.

Against this backdrop, investors should go for defensive stocks, especially telecommunications and local real estate investment trusts for their decent yields, Ms Lee added, naming SingTel as OCBC's top telco pick. SingTel was one of the 26 STI component stocks that rose yesterday, closing up nine cents or 2.23 per cent at $4.13. It was also one of the hottest counters, with 48.9 million shares traded. StarHub was up four cents or 1.07 per cent to $3.79.

Hutchison Port Holdings Trust was the top-gaining blue chip, rising two US cents or 4.6 per cent to 45.5 US cents. Golden Agri-Resources added 1.5 cents or 4.48 per cent to 35 cents, while Singapore Press Holdings put on 10 cents or 2.6 per cent to $3.95.

Only two STI stocks ended in the red: CapitaMall Trust was off five cents or 2.29 per cent to $2.13 and City Developments dropped six cents or 0.73 per cent to $8.14.

Noble Group closed up 2.4 cents or 13.64 per cent at 20 cents on 295 million shares traded, making it yesterday's most active. China Aviation Oil Singapore rose half a cent or 0.41 per cent to $1.23. The jet fuel supplier has been quietly putting on 16.6 per cent over the past month. With a market capitalisation of $1.06 billion, it is now Singapore's biggest energy stock, and investors who have followed it are excited over its zero gearing and large cash hoard, which point to the ability to grow through acquisitions.

A version of this article appeared in the print edition of The Straits Times on July 01, 2016, with the headline 'Asia bullish as post-Brexit rally continues'. Print Edition | Subscribe