Bulls And Bears

Bank and commodity stocks rack up gains

Rise in oil price and growing expectations of delay in US rate hikes lift market sentiment

Singapore stocks enjoyed a rare rally yesterday on better news at home and overseas.

The global factors came in the form of further rises in the oil price and growing expectations that the US will delay any more rate hikes.

At home, investors piled into bank shares, helping the benchmark Straits Times Index to surge 1.67 per cent or 43.78 points to 2,657.57. The banks were back in favour after having been oversold in recent weeks. A positive view on OCBC came from RHB Research, which said its management's "proactive loan portfolio review would contain the rise in non-performing loans".

DBS Group rose 2.1 per cent or 29 cents to $13.89 and OCBC gained 1.8 per cent or 14 cents to $7.92.

Singtel was another winner, up 1.9 per cent or seven cents at $3.76.

A strong Wall Street close overnight, driven by news that US industrial production in January rose by the most in 14 months, didn't hurt sentiment either.

A 7 per cent jump in the oil price on Wednesday after Iran voiced support for a Russia-Saudi-led move to freeze production boosted crude-related counters Keppel Corp, up by 2.3 per cent or 12 cents at $5.32, and Ezra Holdings, up by 6.1 per cent or 0.3 cent at 5.2 cents.

Commodity counters also got a lift. Noble Group, the most actively traded counter, soared nearly 12 per cent or four cents to 37.5 cents, with 135.9 million shares traded, and Golden Agri-Resources gained 1.4 per cent or 0.5 cent to 37 cents on a turnover of 41.9 million shares.

"The markets are rallying because of expectations that US rate hikes will be deferred to the end of the year," remisier Alvin Yong said. "But if key US data continues to be strong, then the Fed may have no choice but to raise rates."

St Louis Fed president James Bullard had said on Wednesday it would be "unwise" to continue raising interest rates, given declining inflation expectations and market volatility. "Mr Bullard is a well-known hawk, and if he says the Fed may have to reconsider the pace of rate hikes... that spells good news for the market," Mr Yong said.

Meanwhile, premium marble producer Terratech Group plunged nearly 12 per cent or 0.6 cent to 4.5 cents, with 54.4 million shares traded. This came after Terratech, a unit of engineering company Tritech Group, announced that Tritech is not selling a 29 per cent stake in the firm after all.

Last month, Tritech had said it was selling the stake to Mr Chew Hoe Soon, non-executive chairman of SHS Holdings, for $12.5 million.

Terratech said the parties had on Wednesday mutually agreed not to proceed with the disposal.

Sembcorp Marine continued to rebound, rising nearly 5 per cent or eight cents to $1.70, on speculation that Temasek Holdings - which owns 49.5 per cent of SembMarine's parent - could take the company private.

A version of this article appeared in the print edition of The Straits Times on February 19, 2016, with the headline 'Bank and commodity stocks rack up gains'. Print Edition | Subscribe