Bulls And Bears

S'pore shares extend rally in line with region

Expectations for further stimulus from BOJ, dovish tone from Fed likely to fuel rally

Singapore shares extended gains yesterday as regional markets pushed higher on further hopes for stimulus in major global centres.

The benchmark Straits Times Index (STI) rose 25.68 points or 0.89 per cent to 2,901.82.

Tokyo again took the lead in Asia, jumping 2.46 per cent on a retreating yen, as traders held on firmly to expectations for further stimulus measures from Japan.

Shanghai rose 1.82 per cent, and Hong Kong advanced 1.65 per cent.

The positive showing here was likely helped by buoyant sentiment on Wall Street on Monday, where traders stayed sanguine over June's standout non-farm payrolls report.

The Dow Jones Industrial Average added 0.44 per cent overnight, and the S&P 500 put on 0.34 per cent to reach an all-time high.

CMC Markets Singapore market analyst Margaret Yang told The Straits Times that sentiment in Asia has been improving amid a post- Brexit rally.

Any possible downside in the Singapore market has been cushioned by low valuations and relatively high dividend yields, she said, adding that such factors are "especially attractive in today's low interest rate environment".

For the rest of the month, however, market direction will likely be guided by the Bank of Japan (BOJ) meeting and the Federal Open Market Committee meeting, set for late July, said Ms Yang.

"(Expectations for) more stimulus from the BOJ and a more dovish tone from the Federal Reserve will probably fuel the rally. However, any surprise will do the reverse."

Singtel continued to play a large role in propping up the STI, rising eight cents or 1.9 per cent to $4.31.

But an OCBC Investment report noted that while the discounted cash flow valuation of Singtel's core business has improved amid post-Brexit market volatility, current valuations are still "not attractive enough". It downgraded its call on the stock from "buy" to "hold", although the group's prospects remain favourable.

Property giant CapitaLand rose two cents or 0.7 per cent to $3.05, after announcing that its wholly- owned serviced residence business arm, The Ascott, is buying its first serviced residence in Melbourne for A$71 million (S$73 million) through a 50:50 joint venture with Qatar Investment Authority.

This comes as part of Ascott's A$500 million strategic partnership with Quest Apartment Hotels, one of the largest serviced apartment operators in Australia.

Noble Group's rights shares were the top active for a second day, surging 0.8 cent or 16.3 per cent to 5.7 cents, on 439.3 million units done.

Other actives included Noble Group itself, which jumped one cent or 6.1 per cent to 17.4 cents, and Ezra Holdings, which fell 0.2 cent or 2.9 per cent to 6.8 cents.

A total of 1.78 billion shares worth $1.09 billion changed hands across the bourse yesterday.

A version of this article appeared in the print edition of The Straits Times on July 13, 2016, with the headline 'S'pore shares extend rally in line with region'. Print Edition | Subscribe