SINGAPORE - Singapore shares rallied 2.22 per cent on Wednesday (Oct 7) in tandem with the rest of Asia, buoyed by rebounding oil prices, and on speculation that the Federal Reserve will refrain from increasing US interest rates this year on further signs of slowing global economic growth.
The benchmark Straits Times Index extended gains for a third straight session, surging 64.40 points to 2,961.81 on a blue-chip led rally by DBS, OCBC, UOB, Keppel Corp, Wilmar International and Genting Singapore.
DBS jumped 3.3 per cent or 56 cents to $17.48, OCBC was up 2.9 per cent or 26 cents to $9.32, while UOB climbed 3.6 per cent or 67 cents to $19.52. Keppel Corp rose 3.8 per cent or 26 cents to $7.18, Wilmar International gained 4.7 per cent or 13 cents to $2.89, while Genting Singapore jumped 6 per cent or 4.5 cents to 79.5 cents.
The IMF cut its global growth forecasts for a second time this year on Tuesday, citing weak commodity prices and a slowdown in China and warned that policies aimed at increasing demand were needed.
It forecast that the world economy would grow at 3.1 per cent this year and by 3.6 per cent in 2016. Both new forecasts are 0.2 percentage point below its July forecast and are 0.4 percentage point and 0.2 percentage point below its April outlook, respectively.
Also extending the rally in local shares are their more attractive valuations relative to US and European equities.
"The near 16 per cent slump in the STI during the third quarter had pulled the price-to-equity ratio from 15 times down to a two-year low of 12.6 times as at the end of September, making it one of the lowest in the region," IG market strategist Bernard Aw said.
Oil-related counters were among the most actively traded as US oil approached $50 a barrel for the first time since July, while shares of Singapore flag carrier SIA fell 0.6 per cent or six cents to $10.64, on prospect of higher fuel prices.
Ezra Holdings jumped 7.9 per cent or 0.9 cent to 12.3 cents, with 135 million shares traded; Vallianz soared 13 per cent or 0.6 cent to 5.2 cents, with 83 million shares traded; Rex International gained 7.4 per cent or 0.7 cents to 10.2 cents, with 58.7 million shares traded; and Ezion climbed 9.8 per cent or 6.5 cents to 72.5 cents, with 51.9 million shares traded.
"Nobody expected the STI rally to be this strong, and it's too early to say if the rally is sustainable. A lot depends on what (Fed Chair Janet) Yellen says at the October FOMC meeting and how Singapore corporates perform for the third quarter earnings season," remisier Alvin Yong said.