BullsAndBears

Rebound in crude oil prices boosts STI

S'pore shares snap 6-day losing streak as good sentiment spreads to oil and gas sector, DBS

Singapore shares snapped a six-day losing streak, as a rebound in crude oil prices to above US$50 a barrel and a positive lead from Wall Street helped push the local bourse into positive territory.

The Straits Times Index closed up 7.04 points, or 0.25 per cent, at 2,844.02. But for the week, the local bourse shed 0.8 per cent.

The market was buoyed by gains in DBS Group Holdings, which rose 0.7 per cent or 10 cents to $14.89, HongKong Land, which gained 1.6 per cent or 10 US cents to US$6.47; and OCBC, which edged up 0.4 per cent or three cents to $8.45.

Analysts say an oil bull run lifted Brent by more than 20 per cent to an eight-week high from a low of US$41.80 on Aug 2, on hopes that producers could agree on measures to support crude.

"The good sentiment spread to the local oil and gas sector and, in turn, DBS as well," CMC Markets analyst Margaret Yang said.

Keppel Corp edged up 0.4 per cent or two cents to $5.30; Sembcorp Industries rose 1.5 per cent or four cents to $2.72, while Sembcorp Marine gained 1.5 per cent or two cents to $1.325.

Energy-related plays were among the most actively traded. Ezra Holdings rose 2.3 per cent or 0.1 cent to 4.4 cents, with 34.5 million shares traded; Ezion Holdings was flat at 26 cents, with 18.7 million shares traded, while Vallianz was flat at 2.2 cents, with 23.8 million shares traded.

Charisma Energy surged nearly 29 per cent, or 0.2 cent, to 0.9 cent, as Rex International jumped 1.9 per cent or 0.1 cent to 5.4 cents.

Singtel capped its upside, dipping 0.2 per cent or one cent to $4.19, after a broker downgraded the stock to hold from buy, stating that the proposed $2.47 billion deal to acquire stakes in Intouch and Bharti Telecom from Temasek Holdings was a "short-term negative".

While the company's dividend payout is to be maintained at 60 to 75 per cent, dividend per share could be reduced because the deal was done in cash, the broker said.

"But in the long run, the deal is good for Singtel because more than 70 per cent of its revenue is from overseas associates," Ms Yang said.

RHB Securities, keeping a neutral call, said: "We believe the deal is timely, with political risks in Thailand having receded alongside Temasek's desire to monetise or streamline some of its investments."

Meanwhile, Otto Marine fell 1.6 per cent or 0.5 cent to 30.5 cents, following news that it applied for a winding up of industrial equipment supplier Hoe Leong Corporation, for not being able to pay off US$920,000 (S$1.2 million) in debt.

Hoe Leong yesterday said it has "sufficient financial resources to pay the sum and that it can continue as a going concern".

It added it had reviewed its forecasts of results for full-year 2016 and considered the support of its bankers and majority shareholder, Hoe Leong.

A version of this article appeared in the print edition of The Straits Times on August 20, 2016, with the headline 'Rebound in crude oil prices boosts STI'. Print Edition | Subscribe