STI climbs as rally continues across Asia

Local shares close above pre-crash levels but some investors still proceeding cautiously

Local shares closed above the levels seen before the January crash yesterday, as the rally continued for the second day across most Asian markets after the Federal Reserve held United States interest rates steady.

The benchmark Straits Times Index (STI) put on 26.63 points, or 0.92 per cent, to 2,906.80, its highest since last November. A healthy $1.54 billion worth of shares were traded, partly on the back of more global funds flowing into the regional markets.

The STI closed 2.8 per cent up for the week, higher than the 2.3 per cent gain by the regional index, MSCI Asia ex-Japan.

But while market confidence has improved, not everyone is convinced that the rally will hold up.

Remisier Desmond Leong said his clients are showing an improved appetite, but prudence is still key.

"In the near term, I think 2,950 is possible, but there will be a strong resistance around 3,000. Expect more consolidation from now because we're not going to slice through easily," he said. "My advice to my clients is to buy blue chips, which will at least give stability in dividend beyond the near term."

Yesterday's rally sent 21 blue chips higher, with banks again leading the gainers. OCBC Bank closed up 18 cents, or 1.98 per cent, at $9.27 and DBS Group rose 28 cents, or 1.78 per cent, to $16.02. But United Overseas Bank added only six cents, or 0.31 per cent, to $19.29.

Property plays were also among the investors' favourites because of their low valuations.

City Developments Limited (CDL) went up 18 cents, or 2.35 per cent, to $7.85. The developer was given a "buy" call by CIMB analyst Lock Mun Yee, with a target price at $10.32.

"Valuations are attractive, with a price-to-book value ratio at 0.76," she said. "Meanwhile, we foresee that CapitaLand and CDL would be the least impacted from Qualifying Certificate penalties."

These refer to the hefty regulatory fees a developer must pay if its private residential project is not fully sold in two years after completion.

Property giant CapitaLand was among the STI losers yesterday, dropping two cents, or 0.63 per cent, to $3.17. Thai Beverage pared for the second day, down half a cent, or 0.68 per cent, to 73 cents.

Outside the STI, Yoma Strategic Holdings stayed on its upward trend, rising 4.5 cents, or 8.65 per cent, to 56.5 cents and is up around 33 per cent over the past month.

Yoma was one of the market's top active counters yesterday, with 54.4 million shares traded.

Spackman Entertainment, another popular pick for punting, closed flat at 13.4 cents on 190.1 million shares traded. Ezra Holdings fell 0.3 cent, or 2.54 per cent, to 11.5 cents after 91.1 million shares changed hands.

Ezra was part of the offshore and marine counters still stuck in the doldrums. Mermaid Maritime fell 0.1 cent, or 0.91 per cent, to 10.9 cents, and Ezion Holdings pared half a cent, or 0.8 per cent, to 62 cents.

A version of this article appeared in the print edition of The Straits Times on March 19, 2016, with the headline 'STI climbs as rally continues across Asia'. Print Edition | Subscribe