Bulls And Bears

Shares rise after Fed keeps rates on hold

STI edges up amid signs that US central bank won't raise interest rates until mid-year

Singapore shares closed higher on a stronger showing on Wall Street futures and fresh signs that the next United States interest rate rise will be later rather than sooner.

The Straits Times Index added 0.64 per cent or 16.27 points to close at 2,562.45.

The US Federal Reserve kept rates on hold at its latest meeting, flagging risks to the US economy from global market turmoil.

"Given that there was no change in the forward guidance, we think that March is no longer in the Fed's plans. Although...policymakers were forecasting an increase in the federal funds rate of a full percentage point this year in four steps, we think the Fed is no longer sure," an ABN Amro report said. "We think the Fed will not hike rates until June. Markets are now expecting only one rate hike this year."

ABN Amro sees three rate hikes this year, citing downside risks related to the strong US dollar, lower energy prices and falling equity prices.

Gainers yesterday included Singtel, Wilmar International and HongKong Land. Singtel rose 1.5 per cent or five cents to $3.48, Wilmar jumped 4.5 per cent or 12 cents to $2.77 and HongKong Land climbed 2.2 per cent or 13 cents to $6.11.

Laggards included DBS Group Holdings, which fell 0.9 per cent or 12 cents to $13.54, and ComfortDelGro, which slipped 1.4 per cent or four cents to $2.84.

EMS Energy, which was queried by the Singapore Exchange on Wednesday, crashed nearly 55 per cent or 12 cents to 10 cents. The company said it was not aware of any information that would explain trading activity in its shares.

SingPost, also queried yesterday by the SGX, extended losses for a third straight session, shedding 6.5 per cent or nine cents to $1.30, with 31 million shares traded. Its shares had fallen 4.5 per cent on Wednesday and 1.4 per cent on Tuesday.

"In addition to corporate governance issues, there are now concerns over whether they appointed the right auditor to investigate the issues," remisier Alvin Yong said. SingPost was last queried on Jan 6 when its stock lost 6.2 per cent in a day.

Mr Ong Kian Lin of RHB Research said he anticipates a "turbulent" first half of the year before a modest rebound in the second half.

"With downward earnings revisions in the ongoing results season and the sharp correction in China equities, the STI has returned minus 11.7 per cent year to date," he said. "Singapore's growth prospects are increasingly looking uncertain, and we do not rule out chances of further earnings downgrades in the coming quarters."

Noble Group was the most actively traded yesterday, slipping 1.8 per cent or 0.5 cent to 27 cents, with 32.9 million shares traded. The commodity trader secured shareholders' approval yesterday to sell its 49 per cent stake in Noble Agri to Cofco for at least $750 million.

A version of this article appeared in the print edition of The Straits Times on January 29, 2016, with the headline 'Shares rise after Fed keeps rates on hold'. Print Edition | Subscribe