Bulls And Bears

STI buoyed by bank and oil stocks

Blue chips do well as Wall Street and Opec agreement to cut crude help boost sentiment

Bank and oil stocks rallied on a positive lead from Wall Street and an earlier bounce in oil prices, following a surprise agreement by Opec members to cut crude output.

The Straits Times Index closed up 0.97 per cent or 27.7 points to 2,885.71, buoyed by DBS, which jumped 1.7 per cent or 26 cents to $15.48, and Keppel Corp, ahead 3.8 per cent or 20 cents to $5.42. OCBC rose 0.9 per cent or eight cents to $8.68, UOB gained 0.9 per cent or 16 cents to $18.96, Singtel edged up 0.5 per cent or two cents to $4.02, and Jardine Matheson climbed 0.9 per cent or 54 US cents to US$60.79.

Oil prices jumped about 6 per cent overnight after Opec - the Organisation of Petroleum Exporting Countries - surprised observers by agreeing to rein in production, a move that should help slash the supply glut depressing prices. But as the deal lacked details on how the quotas may be managed, prices retreated 0.5 per cent yesterday on profit taking. "This suggests how short the sector is, and until we can see the oil price rise is sustained, or we see new order wins, it is really hard to get too excited," said a dealer.

Still the Opec decision lifted heavily battered energy-related plays here yesterday and triggered bouts of short covering.

Sembcorp Industries gained 2.8 per cent or seven cents to $2.60 and Sembcorp Marine jumped 5.6 per cent or seven cents to $1.33.

The most actively traded included Ezra Holdings, which jumped 5.1 per cent or 0.3 cent to 6.2 cents on trade of 205.6 million shares. Ezion gained 3.6 per cent or one cent to 28.5 cents, with 57.8 million shares traded. Rex International rose nearly 3 per cent or 0.2 cent to 6.9 cents, with nearly 56 million shares traded. Ausgroup jumped 13 per cent or 0.6 cent to 5.2 cents, with 33.5 million shares changing hands. KrisEnergy surged 15.6 per cent or 1.5 cents to 11.1 cents.

But Maybank Kim Eng dealer Lee Yu Sheng warned that the rally in oil counters is sentiment-driven rather than due to an improving earnings outlook for the sector. "Even if oil prices were higher, margins for companies like Keppel are still very weak," he said.

Investors are watching for details on targets for each member country, which will be determined at the next Opec meeting in November.

Noble Group was the most actively traded counter, gaining about 6 per cent or 0.9 cent to 16 cents, with 262.6 million shares changing hands.

In a filing to the Singapore Exchange, American fund manager Franklin Resources said it acquired 25 million shares at an average price of 13.84 cents on Monday, confirming speculation that foreign institutions have been buying recently. "And some short sellers are getting spooked," a dealer said.

Talk that a unit of Spackman Entertainment may soon get approval to list on the Hong Kong stock exchange sent the firm's stock up 2.8 per cent or 0.3 cent to 11.2 cents, with 72.1 million shares traded.

A version of this article appeared in the print edition of The Straits Times on September 30, 2016, with the headline 'STI buoyed by bank and oil stocks'. Print Edition | Subscribe