BullsAndBears

STI up on positive lead from Chinese stocks

Easing concerns over Greece debt situation also helped boost investor sentiment

A positive lead from Chinese equities following news that the government is pumping in money to stem the recent market rout helped lift Singapore shares yesterday.

Also helping are easing concerns over Greece after its Parliament approved a slew of austerity measures, a move supported by the German Parliament.

The key benchmark Straits Times Index (STI) rose 20.03 points to 3,373.48, with 1.86 billion shares worth $1 billion traded.

"It's a relief rebound, thanks to the 3 trillion-plus yuan (S$660 billion-plus) market-stabilisation fund," a remisier said.

China Securities Finance Corp (CSFC), a government agency, has between 2.5 trillion and 3 trillion yuan on tap to support stocks. These funds will likely be used to offer liquidity support to brokerages and to buy stocks and mutual funds.

  • Markets Highlights

  • 1. Good news is bad for gold. With more positive news for the US economy, higher interest rates look all but inevitable. China said it held less of the metal in reserves than some analysts forecast. That was the catalyst for the commodity to fall to as low as US$1,086.18 per ounce.

    2. Higher interest rates also are a dampener on commodities.

    The Bloomberg Commodity Index has been declining. Apart from gold, Brent crude is also sliding while the US dollar is strengthening.

    3. Sinarmas Land said that it is buying a freehold office asset for £258.7 million (S$552 million).

    Net lettable area is about 248,350 sq ft and the building is located in the eastern part of London.

    4. Jardine Cycle & Carriage, which was raising funds from a rights issue, said that the issue was oversubscribed.

    It was offering one rights share for every nine held at $26 per rights share, to raise around $1 billion, partly to repay loans.

    5. Stratech Group which supplies technology-based surveillance and transportation systems was set to exit the Singapore Exchange's watchlist from yesterday, a move that should give it a fresh lease of life with investors.

"CSFC has acted as a conduit to inject rescue funds into the stock market," HSBC China equity strategist Roger Xie said in a note yesterday.

"The recovery also alleviates the widespread trading suspension. More A-share companies have resumed trading this week, but 25 per cent of the market is still under trading halts. In the past week, index-tracking exchange-traded funds (ETFs) have faced difficulties in tracking the Chinese market because their holdings might be in trading suspension. For example, overseas ETFs have experienced wild daily price swings; and some ETFs were traded at large discount to their net asset value."

Traders are cautious ahead of the release of purchasing managers' index factory data from China, Germany, France and the United States, all due on Friday. "If manufacturing data from the US is good, that may fuel speculation that the interest rate hike will likely be in September," the remisier said.

Penny plays still rule the roost; CEFC International surged 80 per cent or eight cents to 18 cents, with 127.5 million shares traded.

"Investors are betting on penny plays because CEFC's gains have been spectacular," said remisier Desmond Leong.

S-chip Foreland Fabritech Holdings skyrocketed 115 per cent or 1.5 cents to 2.8 cents, with 74.8 million shares traded; Sino Construction jumped 28 per cent or 0.9 cent to 4.1 cents, with 181.8 million shares traded. New Silkroutes Group, another hotly traded penny counter, surged 100 per cent or 0.1 cent to 0.2 cent, with 58.8 million shares traded.

Meanwhile, talk that Temasek Holdings may sell its 67 per cent stake in Neptune Orient Lines sent the shipping firm up 7.4 per cent or 6.5 cents to 94 cents, with 30.1 million shares traded.

OCBC Investment Research, which has a hold call on NOL, said: "Post-divestment of its logistics business on May 15, NOL has become a pure-play container shipping company, and we think that it is indeed now more attractive to prospective buyers."

A version of this article appeared in the print edition of The Straits Times on July 21, 2015, with the headline 'STI up on positive lead from Chinese stocks'. Print Edition | Subscribe