Bulls And Bears

STI rebounds to highest level in 2 1/2 years

Local banks make strong gains amid better Wall Street showing and higher oil prices

Local shares made a swift rebound yesterday following Monday's slight losses amid higher oil prices, an upbeat outlook on global economies and a better performance on Wall Street.

A new record on Wall Street on Monday night helped drive the benchmark Straits Times Index (STI) up 31.25 points or 0.92 per cent to 3,413.10 - the highest in 21/2 years. Turnover came in at 2.7 billion shares worth $1.4 billion.

CMC Markets Singapore analyst Margaret Yang noted that higher oil prices helped lift energy shares and had alleviated concerns over Singapore's oil and gas sector.

"The STI has also broken out above 3,400 points, and its next major resistance is 3,547 points - the peak in 2015. The STI is traded at around 11.7 times price-to-earnings, still among the cheapest in Asian markets," said Ms Yang.

The three lenders added a total of 22.5 points to the STI, after being weighed down by index heavyweight DBS, which announced disappointing third-quarter results. DBS led the gains, up 70 cents at $23.49. UOB rose 37 cents to $25.13, while OCBC climbed nine cents to $11.81.

Remisier Ernest Lim said the bank gains would have been led by the increasing likelihood that the worst of the provisions for the energy sector might be over, while they have benefited from the increase in loan books as well as a potential rise in net interest margins as interest rates creep higher.

Among the most active counters was Genting Singapore, which rose 3.5 cents to $1.27 on a volume of 55.7 million. The firm posted a 35 per cent jump in third-quarter net profit on Monday.

Heavy trading was recorded for energy stocks, with KrisEnergy and Rex International making gains.

Keppel Corp added 12 cents to $7.62 and Sembcorp Marine rose 2.5 cents to $1.98.

In particular, GSS Energy rose 5.1 per cent to 18.5 cents - the highest since April 10, with about 25 million shares changing hands.

Mr Lim noted: "It is common knowledge that GSS is drilling for oil. Thus, there may be updates in the next few weeks - that is, whether it manages to find oil. Such an update is likely to be another driver for its share price."

This strong showing from energy stocks came on the back of the anti-corruption crackdown in Saudi Arabia that has triggered a spike in oil prices, which hit US$64.27 on Monday - the highest since June 2015.

Across the region, fresh milestones were hit, fuelled by higher oil prices and general optimism. Tokyo's Nikkei, Hong Kong's Hang Seng, Malaysian and Australian shares all ended higher.

Seoul's Kospi bucked the trend, ending the day slightly lower while New Zealand shares were unchanged. Mr Philip Wee, strategist at DBS Group Research, noted that even though oil prices went up, the US dollar slipped with lower US bond yields.

A version of this article appeared in the print edition of The Straits Times on November 08, 2017, with the headline 'STI rebounds to highest level in 2 1/2 years'. Print Edition | Subscribe