Shares rally on China interest rate cut, STI closes 15 points higher

A file picture of pedestrians walking past a digital screen displaying stocks index data at the financial district in Singapore. PHOTO: AFP
A file picture of pedestrians walking past a digital screen displaying stocks index data at the financial district in Singapore. PHOTO: AFP

SINGAPORE - Local shares continued their rally from last week, joining several regional key markets to chalk up gains on Monday (Oct 26) amid cheers for China's move to cut interest rates.

The People's Bank of China announced a cut last Friday, its sixth since November last year, in a bid to stimulate stalling economic growth, while reducing the reserve requirement ratio imposed on banks.

Positive sentiments in Asian markets on Monday were expected due to the easy money, and Shanghai duly put on 0.5 per cent after a somewhat volatile session that saw some profit-taking.

"The market was slightly buoyed by the central bank's rate cut, but appeared to be in a correction after it rose a lot in October, and some investors sold stocks on the short-lived rise," Haitong Securities analyst Zhang Qi told Reuters in Shanghai.

Tokyo also rose, up 0.65 per cent to reach a fresh two-month high. But Hong Kong pared 0.15 per cent and Kuala Lumpur ended 0.24 per cent down.

In Singapore, the benchmark Straits Times Index ended higher for the fifth straight day, rising 14.61 points or 0.48 per cent to 3,083.07, after the 1.2 per cent rise over last week.

Signs of sell-off were also visible here, with the STI ending below the 3,090 level that it kept through most of the day. Nonetheless, 19 blue chip stocks managed to end higher.

The top gainers were Golden Agri-Resources, which was up 2 cents or 5.13 per cent to 41 cents, and Noble Group, which rose 2 cents or 3.7 per cent to 56 cents.

Since it dipped to a 12-month low on Oct 5, Noble has jumped a total 47.4 per cent as the commodity giant continued its gradual recovery from the Iceberg saga. But balance sheet issues still remain, with rating agency Moody's warning last week that it may lose its investment-grade credit rating if credit issues are not resolved in the coming months.

Hutchison Port Holdings ended one US cent or 1.8 per cent up at 56.5 US cents, following news last Friday that its net profit for the three months to Sept 30 went up 7.2 per cent year-on-year.

In his note, DBS analyst Paul Yong maintained his buy call for the port operator, saying: "With half of its customers due for renewal in 2016, further tariff increases, alongside efficiency gains from ongoing efforts to boost productivity, could help drive earnings beyond this year."

Meanwhile, Sembcorp Industries lost the most among the blue chip counters, down 9 cents or 2.43 per cent to S$3.61. The company will announce its third-quarter results on Thursday, but investors were clearly downbeat on the group after Sembcorp Marine's third-quarter results came in lower than forecasts.

whwong@sph.com.sg