Singapore stocks rise to 2007-level highs, cheered by US rate cut; STI up 1.1%

SINGAPORE –The jumbo rate cut by the US Federal Reserve overnight turbocharged shares here to their highest level since November 2007.

Local investors gleefully piled into the market on Sept 19 to send the Straits Times Index (STI) up 1.1 per cent or 40.76 points to 3,633.18, with 27 of the 30 counters ending in the black, while three closed flat.

Across the broader market, trade was robust as well, with gainers trouncing losers 415 to 210 after 1.4 billion securities worth $1.6 billion changed hands.

CapitaLand Investment was the STI’s top gainer, rising 4.5 per cent to $3.05.

Real estate investment trusts (Reits), widely seen as benefiting from rate cuts, were mostly in the black as well, with Mapletree Pan Asia Commercial Trust being the top gainer among them. It closed up 2.7 per cent at $1.51.

The three banks also enjoyed a day in positive territory: UOB gained 0.6 per cent to $32.73; OCBC Bank was up 0.8 per cent to $15.46; and DBS Bank rose 1.1 per cent to close at $38.50.

Regional markets were in on the action as well: Hong Kong’s Hang Seng Index rose 2 per cent; the Nikkei 225 in Tokyo gained 2.1 per cent; South Korea’s Kospi was up 0.2 per cent; and Australian stocks added 0.6 per cent to close at a record high.

SPI Asset Management managing partner Stephen Innes said Asia’s markets are “riding high” as the Fed’s “jumbo” rate cut would make it easier for regional central banks to cut rates, potentially fuelling growth and boosting stock market valuations.

“With the Fed taking the plunge, these more cautious central banks may finally feel encouraged to join the rate-cut party,” he added.

But the 50-basis point rate reduction failed to ignite Wall Street, where the three key indexes all fell by about 0.3 per cent on investor fears that the Fed cut so much due to its concerns over the outlook for US economy.

THE BUSINESS TIMES