Bulls And Bears

Banks lift STI as buoyant sentiment sweeps region

Asia markets rally on positive mood after Wall Street gains and as tensions ease over US-China tariffs

Regional markets took their cue from gains on Wall Street overnight and went north, driven by optimism that the latest exchange of tariffs between the United States and China may inflict less economic damage than many had feared.

The mood allied with buoyant sentiment for the banks helped send the Straits Times Index (STI) over the 3,200 mark for the first time this week.

The index advanced 37.25 points or 1.2 per cent to 3,217.68 to finish the week ahead 1.8 per cent.

Gainers outnumbered losers 261 to 156 on trade of 1.63 billion shares worth $1.71 billion.

The three local banks enjoyed a heady session: DBS rose 3.2 per cent to $26.03; OCBC added 1.7 per cent to S11.29 and UOB gained 1.4 per cent to $26.50.

Keppel Corp put in a good effort as well, up 3.4 per cent to $7.03 - its biggest one-day gain since Jan 23.

Apart from the group's announcement that Keppel Land China is acquiring a 40 per cent stake in a Nanjing residential project, OCBC senior investment analyst Low Pei Han noted that the counter's surge could be attributed to a "return in risk appetite" in the markets recently.

Similarly, Sembcorp Marine rose 2.6 per cent to $1.98.

YZJ Shipbuilding was the most heavily traded counter for the day with 54.6 million shares changing hands although it closed flat at $1.16.

Traders could not entirely explain the high volume, but noted that news this week that the group has agreed to establish a joint venture company with Japan's Mitsui & Co may have garnered interest.

Daiwa Securities analyst Royston Tan has issued an "outperform" rating on the counter, with a target price of $1.16, as he believes the firm's core shipbuilding division is likely to benefit from the greenback dollar strengthening against the yuan.

Conversely, Hong Kong Land's decline of 1.9 per cent to US$6.69 dragged the STI lower. This came on the back of reports that recent yuan weakness might hamper rental recovery at major malls in Hong Kong for this half and next.

Nonetheless, DBS analyst Jeff Yau has made a "buy" recommendation, with a target price of US$8.57, noting that leasing demand from Chinese-based financial institutions remains strong.

Elsewhere, the Hang Seng index rose 1.73 per cent, the Shanghai Composite added 2.5 per cent, Japan's Topix gained 0.9 per cent to hit a four-month high while the Kospi in Seoul added 0.7 per cent.

A version of this article appeared in the print edition of The Straits Times on September 22, 2018, with the headline 'Banks lift STI as buoyant sentiment sweeps region'. Subscribe