Asian markets gain from China economic plans, STI closes 41 points up

SINGAPORE - Regional markets chalked up strong gains on Wednesday (Nov 4), taking the cue from China where investors were encouraged by China's forward looking economic plans.

News emerged overnight from Beijing that the Chinese government is targeting a "medium-high" growth of at least 6.5 per cent in its five-year economic plan, while pledging further efforts to open up capital market.

Eager for signs of clarity and stabilisation, investors cheered the messages, sending Shanghai Composite up 4.31 per cent, its best daily gain in seven weeks. Hong Kong was lifted by renewed expectations for the Hong Kong-Shenzhen Stock Connect and gained 2.15 per cent. Tokyo went up 1.3 per cent.

The mood was also positive at Wall Street overnight, as Dow Jones Industrial Average put on 0.5 per cent, due partly to a tech and energy sector rally.

Against this backdrop, Singapore's benchmark Straits Times Index rose for the second straight day, up 40.92 points or 1.36 per cent to 3,040.48. But remisier Alvin Yong was not convinced of the strength of the increase.

"The market went up mainly due to the sentiments spilled over from China and Hong Kong. Investors are still looking for green shoots in the growth outlook, but Singapore's manufacturing activity is still very weak. The index can go south the moment further downbeat signs emerge. I still see the index going sideways between 2,960 and 3,080."

The Nikkei Singapore purchasing managers' index reading was 50.2 for October, implying a near stagnant growth.

However, there were bright spots to note due to corporate actions, Mr Yong noted, pointing to Zagro Asia which went up 3.5 cents or 13.46 per cent to 29.5 cents. The investment company announced on Tuesday that it has received an offer of 30 cents per share for a buyout and delisting.

Biosensors International Group also rose after its announcement on Wednesday before market open that it will merge with CB Medical Holdings on an offer of 84 cents per share. Its shares went up 13.5 cents or 19.85 per cent in response to 81.5 cents.

"These developments showed that many small and mid-caps are dealing at a lower much lower than a book value that really reflects their fundamentals. There are good deals in the segment, but investors must weigh the risks carefully," Mr Yong cautioned.

Meanwhile, Rowsley closed down 0.3 cents or 1.51 per cent to 19.6 cents, ahead of its announcement of a $4.2 million net loss in the three months to Sept 30. Chief executive Lock Wai Han stressed that the property and architecture firm will continue to look for investment opportunities in the real estate and hospitality sectors.

Among the blue chips, Noble Group was again the top gainer, up 2.5 cents or 5 per cent to 52.5 cents, with 50.9 million shares transacted. CapitaLand also rose, up 9 cents or 2.88 per cent to $3.21.

whwong@sph.com.sg