Local shares closed up for a second straight day yesterday to push the benchmark Straits Times Index (STI) to its highest point in almost two years, with banking stocks staying hot.
The STI rose 12.99 points or 0.4 per cent to 3,249.97, a level not reached since July 2015. Trading was lively with 1.3 billion shares worth $1.3 billion transacted across the whole market.
With the STI chalking up a 12.8 per cent gain since the start of the year, "the million-dollar question now is whether the momentum can carry on", said KGI Securities Singapore strategist Nicholas Teo.
"At the moment, there aren't any visible headwinds that can reverse the trend even though banking stocks are certain to tire out. When that happens... we might see market funds being rotated away into other laggards," he added.
The range-bound trading on Wall Street might be a preview of that scenario, with the Dow Jones Industrial Average closing up just 0.03 per cent overnight.
Still, local sentiment remains positive for now, and half of the 30 STI component stocks rose yesterday. OCBC Bank was among the top gainers, up 16 cents or 1.55 per cent to $10.46 with 13.9 million traded shares. DBS Group Holdings put on 20 cents or 0.99 per cent to $20.50, and United Overseas Bank added 11 cents or 0.47 per cent to $23.55.
OCBC posted a stellar 14 per cent growth in first-quarter net profit. This means all three local banks beat their market earnings forecast, thanks to loans growth and sizeable reductions in credit cost.
However, Credit Suisse private banking South-east Asia research head Kum Soek Ching doubted things can get much better for the trio. "The confluence of factors driving the sector may be at its most positive now - earnings beat, worst of asset quality just over, margin expansion potential from higher rates, prospect of loans recovery. It's hard to get a quarter when all the stars are so aligned, and the rally reflects that," she said in a note yesterday.
Golden Agri-Resources rose half a cent or 1.33 per cent to 38 cents after 15.4 million shares changed hands. Thai Beverage, with 19.3 million shares traded, gained half a cent or 0.54 per cent to 93 cents.
The top loser was Yangzijiang Shipbuilding, which had 26.9 million shares traded. After gaining around 15 per cent since late last month due partly to above-estimate earnings for the first quarter, it closed down 2.5 cents or 1.98 per cent at $1.24 as the market took profit.
Sembcorp Industries fell six cents or 1.87 per cent to $3.14, and Keppel Corp dipped three cents or 0.45 per cent to $6.63. Sembcorp Marine was down two cents or 1.12 per cent to $1.765.
The crude benchmark Brent Futures has not been able to rise above US$50 a barrel in recent sessions, signifying market concerns around output in the United States and effectiveness of the Opec curb.