Singapore shares ended a tad firmer, but upside was capped by analysts' warnings that the high market valuations inspired by the technology rally in the United States may lead to profit-taking.
Investors were mostly sidelined ahead of the Federal Reserve's publication of its Beige Book report on the state of the US' economic health yesterday.
"We ask ourselves the same question over and over - how extended are valuations?" Mr David Kotok, chief investment officer at Cumberland Advisors, said on Bloomberg TV. "Then we see reports on earnings, and there are positive earnings surprises coming from the tech companies - and that would suggest that if that momentum continues, then in fact they are not yet overvalued."
In Singapore, Prime Minister Lee Hsien Loong's parliamentary address lent some support to the market, notably the real estate investment trusts (Reits).
PM Lee said that despite the depressed economic climate, where some companies are consolidating and laying off workers, many investment projects want to come to Singapore because of its stable governance and transparent laws. These investments are in the areas of biomedical science, information technology, insurance and finance.
"His speech comes at a time when businesses are worried with corporate downsizing. The news gives some glimmer of hope," said a broker.
The Straits Times Index (STI) closed at 2,539.94, up 1.39 points, or 0.05 per cent. About 1.66 billion securities, worth $1.02 billion, changed hands.
Mapletree Commercial Trust, Mapletree Industrial Trust, Keppel DC Reit, and Frasers Centrepoint Trust were among the Reits that saw their prices advance.
Technology stocks continued to firm along with the US tech stocks. Venture Corp closed at $20.20, up 1.2 per cent. AEM Holdings closed 2.45 per cent up at $4.18.
Regional markets mostly edged up yesterday. South Korean shares gained 0.63 per cent on continued foreign selling. Tokyo stocks closed 0.47 per cent higher.
Australian shares rose 1.8 per cent yesterday, its biggest one-day percentage gain since Aug 4. Investors looked past Australia's biggest economic contraction on record to focus on signs of a broader economic recovery following upbeat manufacturing data from the US and China.
But Hong Kong shares slipped 0.26 per cent. China's benchmark Shanghai Composite Index dipped 0.17 per cent, though the Shenzhen Composite Index on China's second exchange added 0.27 per cent.
