Bulls And Bears

STI edges up as oil prices stage recovery

Markets in region close higher, following positive showing by Wall Street overnight

Singapore shares rose a little as the oil and gas sector continued to show signs of relief on the back of a further recovery in oil prices, while Asian markets were mostly up, following gains on Wall Street.

The benchmark Straits Times Index (STI) closed 3.43 points or 0.12 per cent higher at 2,885.22. Overall market volume was moderately healthy, with 2.01 billion shares worth $848.7 million traded.

Outside of China, where bourses were closed for the Golden Week holiday, key regional markets also ended in the black, with Tokyo up 0.47 per cent, Kuala Lumpur adding 0.23 per cent and Hong Kong rising 0.69 per cent. These gains followed a positive showing by the Dow Jones Industrial Average, which rose 0.62 per cent overnight.

Oil futures stayed on the recovery path as punters kept their eager eyes on the production cut that Opec will soon nail down, sending crude benchmark Brent above US$51.8 a barrel late yesterday.

But oil prices alone will not revitalise Singapore's oil and gas sector, as many companies are staring at default risks, KGI Securities trading strategist Nicholas Teo said.

"Just in the past days, we had Swissco Holdings warning over a new refinancing plan. This is on the back of similar rumblings like Swiber Holdings and Rickmers Maritime these past months.

"The news flow... can easily blow hot and cold. However, with the bigger picture representing stability - at least for now - drawn against beaten down prices, speculative fund flows may continue to find their way into this sector," he said.

This was evident for Ezra Holdings, which rose 0.2 cent or 3.33 per cent to 6.2 cents on a whopping 244.5 million shares traded. Ezion Holdings added three cents or 9.68 per cent to 34 cents, with 124.7 million shares traded. Noble Group remained hot, up 1.3 cents or 7.3 per cent to 19.1 cents on 436.3 million shares done. The trio were the day's top active counters.

Back on the STI, Keppel Corp was among the 19 blue chip gainers, up six cents or 1.11 per cent to $5.45, and Sembcorp Industries put on two cents or 0.77 per cent to $2.63.

The top gainer was Yangzijiang Shipbuilding, which added 2.5 cents or 3.31 per cent to 78 cents. UOL Group closed up three cents or 0.53 per cent to $5.74, following news that the developer's associate firm UVD has bought the Raintree Gardens estate for $334.2 million.

Meanwhile, Sats was down seven cents or 1.39 per cent to $4.98, leading the eight STI losers. SIA Engineering also dropped, losing two cents or 0.53 per cent to $3.77.

SIA Engineering earlier this week completed the amalgamation of its joint ventures with Rolls-Royce Singapore, a move that will bring greater operational efficiencies, the company said. OCBC analyst Eugene Chua, however, does not expect any boost to the year's financials, maintaining his hold call with a target price of $3.63.

A version of this article appeared in the print edition of The Straits Times on October 07, 2016, with the headline 'STI edges up as oil prices stage recovery'. Print Edition | Subscribe