Bulls And Bears

STI rebounds in line with oil price recovery

Regional bourses also post sizeable gains after Monday's market collapse

Singapore's Straits Times Index (STI) rebounded yesterday from its worst day of trading since October 2008, in line with a recovery in oil prices.

The benchmark index had opened 0.8 per cent lower but reversed course within the first hour of trading. It ended the day 50.17 points, or 1.8 per cent, higher at 2,832.54.

The recovery was in line with that of oil prices, which had plunged on Monday. WTI crude climbed back above US$30 a barrel during the Asian trading session, while Brent rose above US$35.

The beating global indexes suffered on Monday prompted United States President Donald Trump and Vice-President Mike Pence to offer the possibility of fiscal stimulus - including a payroll tax package.

Keppel Corp and Sembcorp Industries, the STI counters most affected by the plunge in oil prices, clawed back some of their losses. Keppel added 1.4 per cent to end at $5.70, while Sembcorp climbed 3.1 per cent to $1.66.

Local lenders also bounced back from their 52-week lows. DBS gained 1.6 per cent to close at $21.49, OCBC Bank added 2.1 per cent to close at $9.72, and United Overseas Bank ended the day at $21.94, advancing 2 per cent.

Mr Joel Ng, KGI Securities' head of research, said in a note to the brokerage's clients that valuations for the trio are now at "reasonable levels". But "this isn't anything to get excited about", he added, unless investors have an investment horizon of at least one year due to headwinds the lenders face this year.

Singapore Press Holdings (SPH) was the STI's biggest gainer in percentage terms. Having fallen to its lowest level in more than 20 years on Monday, the media and property stock jumped 7.5 per cent to $1.87. UOB Kay Hian upgraded its call on SPH to "buy" and said its defensive aged care and student accommodation business "could prove to be valuable amid the wider market selldown".

Trading volume on the Singapore Exchange yesterday was 1.86 billion securities, with total turnover at $2.46 billion. Advancers trumped decliners 324 to 181.

Elsewhere in the Asia-Pacific, benchmarks in Australia, China, Hong Kong, Japan, Malaysia, South Korea and Taiwan all posted sizeable gains.

Markets might be recovering from Monday's shock but volatility is likely to persist, said Bank of Singapore head of investment strategy Eli Lee. "As of now, conditions are not ripe for stability in financial markets," he said in a note.

A version of this article appeared in the print edition of The Straits Times on March 11, 2020, with the headline 'STI rebounds in line with oil price recovery'. Print Edition | Subscribe