Bulls And Bears

Asian markets advance on US Fed's caution

Signals that interest rate rises will be gradual lift STI to its first two-day gain in two weeks

Word from the United States Federal Reserve overnight that interest rate hikes will be gradual gave Asian markets something to cheer and sent Singapore shares up for the second day.

Wall Street also breathed a sigh of relief and drove the Dow Jones Industrial Average up 0.64 per cent. This gave many key markets in the region a strong start yesterday, although the afternoon sessions were weaker.

Hong Kong ended with a 0.29 per cent gain, Tokyo put on 0.22 per cent and Sydney rose 0.37 per cent. Shanghai dropped 1.38 per cent as investors took their money off the table ahead of key economic data due in coming days.

Singapore's Straits Times Index closed up 2.34 points or 0.08 per cent at 2,813.59, marking its first two-day gain in two weeks.

OCBC was one of the 13 gainers among the 30 STI constituents, adding nine cents or 1.03 per cent to $8.81. This followed the morning announcement that its subsidiary Bank of Singapore is acquiring Barclays' wealth management business here and in Hong Kong.

DBS analyst Lim Sue Lin gave OCBC a buy call yesterday with a target price of $9.40.

"The acquisition adds US$18.3 billion to OCBC's current assets under management and also comes with an additional 1,800 customers. We view this transaction as positive for OCBC as it will continue to raise the bank's wealth management income momentum," she said.

DBS and United Overseas Bank also gained. DBS put on six cents or 0.4 per cent to $15.09 while UOB advanced four cents or 0.21 per cent to $18.75.

Singapore Press Holdings rose two cents or 0.51 per cent to $3.98, and Keppel Corp added seven cents or 1.24 per cent to $5.72 as crude oil futures Brent topped US$39 a barrel. Singtel remained bumpy, dropping five cents or 1.33 per cent to $3.72, likely due to profit-taking on Wednesday's gain.

OCBC analyst Carey Wong, however, noted the telco's positive outlook, referring to its marine cyber security partnership with Inmarsat announced two days ago.

"Singtel remains our top pick among the three local telcos, given its ability to grow beyond the traditional telco services into cyber security, big data analytics and digital marketing," Mr Wong said.

Thai Beverage dropped one cent or 1.36 per cent to 72.5 cents, and CapitaLand shed one cent or 0.33 per cent to $3.01.

Among local real estate investment trusts, STI constituents CapitaLand Commercial Trust (CCT) and Ascendas Reit both fell. CCT dropped three cents or 2.07 per cent to $1.42, and Ascendas Reit closed down two cents or 0.84 per cent to $2.35.

The pair are part of the Singapore Exchange S-Reit 20 Index, which has gained around 5.2 per cent in total return this year, the bourse said in an announcement yesterday.

A version of this article appeared in the print edition of The Straits Times on April 08, 2016, with the headline 'Asian markets advance on US Fed's caution'. Print Edition | Subscribe