Bulls and bears

Singapore market rises on US Fed rate hike

Singapore shares rose in line with the rest of Asia after the first United States interest rate hike in nearly a decade.
Singapore shares rose in line with the rest of Asia after the first United States interest rate hike in nearly a decade. PHOTO: SINGAPORE EXCHANGE

Investors believe move shows US now strong enough to withstand higher borrowing costs

Singapore shares rose in line with the rest of Asia after investors took the widely expected first United States interest rate hike in nearly a decade as a positive sign.

Investors believe the Federal Reserve's move indicates the world's largest economy has become strong enough to withstand higher borrowing costs.

The Fed raised interest rates by 0.25 percentage point, taking the Federal Funds rate, or the rate range within which banks offer to lend to each other overnight, to between 0.25 per cent and 0.5 per cent.

"It's not really a big deal because the move was long expected, and already priced in by the market," remisier Alvin Yong said.

The Straits Times Index rose 20.26 points, or 0.71 per cent, to 2,861.18, led by gains in the local banks and Singtel.

OCBC Bank climbed 0.9 per cent, or eight cents, to $8.73, United Overseas Bank edged up 0.2 per cent, or three cents, to $19.11; and DBS Group Holdings added 0.5 per cent, or eight cents, to $16.59. Singtel rose 0.5 per cent, or two cents, to $3.78.

Banks were buoyed by the rate hike, as their net interest margins are expected to improve. But a potentially flat economy might limit loans growth to the mid-single digits at best, said Mr Kelvin Tay, regional chief investment officer at UBS Wealth Management.

"The general economic malaise in the region could perhaps affect the non-performing loans negatively too, especially for banks with greater exposure to Malaysia, Thailand and Indonesia," he warned. "Asset quality concerns are likely to linger, as there appears to be a wide gap in terms of market perception and bank managements' confidence in the asset quality of their loan books."


ST GRAPHICS

Addvalue Technologies was the most actively traded counter, surging 20.5 per cent, or 0.8 cent, to 4.7 cents on 43.6 million shares done.

The firm announced the successful launch of its data relay terminal into low-earth orbit on the Velox-II satellite by an Indian rocket. The satellite carries the firm's data relay terminal as its primary payload. It is among six Singapore-made satellites launched on Wednesday.

The commodities slump following the Fed move weighed on Golden Agri-Resources, which fell 1.5 per cent, or 0.5 cent, to 32 cents on 35.1 million shares done.

Oil-related counters took a hit as oil plunged on the global supply glut. Rex International slipped 3.4 per cent, or 0.3 cent, to 8.5 cents, with 19.5 million shares traded; Ezion dipped 0.8 per cent, or 0.5 cent, to 59.5 cents, with 13.4 million shares traded. Loyz Energy fell 3.6 per cent, or 0.2 cent, to 5.4 cents, with 11.1 million shares traded.

Meanwhile, property investment and development firm IPC Corp rose 7.7 per cent, or 14.5 cents, to $2.03. This, after it said it plans to pay out $1.60 per share as part of a capital reduction exercise following completion of a 14.9 billion yen (S$0.2 billion) sale of seven hotels in Japan.

A version of this article appeared in the print edition of The Straits Times on December 18, 2015, with the headline 'S'pore market rises on US Fed rate hike'. Print Edition | Subscribe