Bulls And Bears

Asian shares hit highest level since 2007

Local bourse lifted in regional tide boosted by corporate earnings, Fed statement on inflation

Singapore shares were lifted yesterday by a swell that swept across Asia, fuelled by strong corporate earnings.

The local benchmark Straits Times Index gained 17.99 points, or 0.54 per cent, to reach 3,354.71, while Asian shares as a whole, measured by the MSCI Asia Pacific Index, rose to their highest level since December 2007.

Hong Kong-based CCB Securities executive director Nelson Yan told Bloomberg that the United States Federal Reserve's recent statement that inflation in the world's largest economy remains below its target of 2 per cent is also helping to boost market sentiment.

That is because low inflation will likely mean the Fed will only gradually raise interest rates to encourage more bank lending, which in turn will spur economic activity.

"Investors are cheering a slower pace at which the Fed may unwind its balance sheet," Mr Yan said.

"The rally will likely continue into the fourth quarter as long as inflation stays mild."

Tokyo stocks gained 0.15 per cent, Shanghai rose 0.06 per cent, Seoul added 0.36 per cent and Hong Kong increased 0.71 per cent.

Noble Group was among the most active stocks at home, falling 18 cents to 39.5 cents.

The commodity trader said on Wednesday that it anticipates a net loss of US$1.7 billion (S$2.3 billion) to US$1.8 billion for the three months to June 30, after posting a net loss of US$129.5 million for the first quarter of this year.

OCBC Bank gained 24 cents to $11.49, after reporting before the market opened yesterday that it had made a net profit of $1.08 billion for the second quarter, an increase of 22 per cent from the same period a year ago.

RHB Securities analyst Leng Seng Choon noted that the bank's non-interest income surged 34 per cent year on year, due to strong life assurance and wealth management contributions. "Our view is that the strong second-quarter life assurance income is unlikely to recur as it is very dependent on the investment portfolio," he said.

The news lifted the other banking stocks, with DBS Group rising 36 cents to $22.25 and United Overseas Bank gaining 32 cents to $24.60.

Viva Industrial Trust added a cent to 93 cents, after saying on Wednesday that second-quarter net property income rose 17.5 per cent from a year ago to $20.2 million. OCBC Investment Research analyst Deborah Ong said in a report that the results were within expectations, but downgraded Viva from "buy" to "hold", with a target price of 89.5 cents.

A version of this article appeared in the print edition of The Straits Times on July 28, 2017, with the headline 'Asian shares hit highest level since 2007'. Print Edition | Subscribe