BullsAndBears

STI snaps 4-day losing streak on upbeat data

Positive showing on Wall St, encouraging data from China and Japan provide cheer

Having drowned in red ink for much of the week, local stocks managed to get some air yesterday and rose in tandem with other markets in the region.

A positive showing on Wall Street and upbeat data from Japan and China spurred investors here to get back into the action.

The better sentiment lifted the Straits Times Index 36.5 points, or 1.1 per cent, to 3,424.64 - a pleasant outcome after four straight days of losses. But the gains still left the index down 24.9 points, or 0.7 per cent, for the week.

Other Asian bourses also saw rises ahead of the release of key US jobs data. The positive sentiment was also helped by optimism over tax reforms in the United States.

Japan data showed the economy expanded at an annualised 2.5 per cent in the third quarter, an improvement on an earlier estimate and a signal that Asia's second-largest economy has finally returned to steady growth after a prolonged slump.

More encouraging news came out of China, which reported strong expansion in both exports and imports last month.

DBS Group Research said it expects Asian equities to deliver gains next year as the global recovery should continue to boost earnings, which have been the key driver of valuations in Asian markets this year. "The Asian growth story remains intact," said DBS Research. "Event risks arising from geopolitical conflicts, European elections, noise from the Trump administration, and central banks' tightening policies could sap risk appetite but they won't be enough to derail the upward momentum.

"Until markets start to price in excessive earnings growth, and confidence and trust are impacted by policy mistakes, markets should trade higher into 2018."

Banks led gains here with DBS Group climbing 60 cents, or 2.5 per cent, to $24.84, United Overseas Bank rising 25 cents, or nearly 1 per cent, to $25.88, and OCBC Bank gaining 27 cents, or 2.2 per cent, to $12.39.

Phillip Capital maintained its "accumulate" rating on the banks on the premise that all indicators such as volume, margins and asset quality point to a healthy fourth quarter.

ComfortDelGro fell three cents, or 1.5 per cent, to $1.91. The firm finally released details of its much-awaited alliance with Uber Technologies after market close and said it would acquire a 51 per cent stake in Uber's car rental subsidiary, which has a fleet of 14,000 vehicles. Valued at about $642 million, with a cash consideration of $295 million, the deal ranks as ComfortDelGro's largest to date.

A version of this article appeared in the print edition of The Straits Times on December 09, 2017, with the headline 'STI snaps 4-day losing streak on upbeat data'. Print Edition | Subscribe