Bulls And Bears

STI up after investors get over ECB jitters

Index jumps 0.7% on hopes Asian exporters will benefit from aggressive ECB stimulus

Singapore shares closed higher yesterday after investors put aside initial jitters that the European Central Bank (ECB) may be running out of policy tools to boost growth.

The Straits Times Index jumped 19.74 points or 0.7 per cent to 2,828.86, but ended 0.29 per cent down for the week.

Keppel Corporation enjoyed a lift when prices for Brent crude firmed up after the International Energy Agency said oil prices may have bottomed out. The stock rose 2.7 per cent or 16 cents to $6.06.

Banking counters also helped buoy up the market. DBS Group was up 0.6 per cent or nine cents to $15.24, OCBC rose 1.1 per cent or 10 cents to $8.80, and UOB gained 0.9 per cent or 16 cents to $18.65. Singtel was another winner, rising 0.5 per cent or two cents to $3.78.

The ECB unveiled stimulus measures that were more aggressive than expected, including expanding the size of bond purchases by €20 billion (S$30.7 billion) to €80 billion per month starting next month, and slashing three key interest rates.

Early reaction in Asia was muted, after the initial cheer was snuffed out when ECB president Mario Draghi said the central bank may not cut interest rates any more.

However, investors snapped back to action by yesterday afternoon on hopes that looser monetary policy in Europe would stimulate lending to companies and consumer spending, and help Asian exporters to Europe.

"We are seeing strong resistance at 2,840," remisier Alvin Yong said.

"People should focus on the €80 billion per month stimulus.

"This is even more than what the US Federal Reserve did the last time they had QE (quantitative easing)," he added.

Penny plays stayed in vogue with Ezra Holdings being the most actively traded counter again, up 1.7 per cent or 0.2 cent to 12 cents, with 187.3 million shares traded.

DBS Group Research downplayed talk of a buyout of EMAS Offshore by its parent Ezra, saying Ezra's "near-term refinancing needs will probably take precedence". Three penny counters were queried by the Singapore Exchange yesterday over unusual volume movements. China Environment jumped 27 per cent or 1.6 cents to 7.5 cents with 125.9 million shares traded, while ecoWise Holdings surged 35.3 per cent or 1.2 cents to 4.6 cents, with 106.9 million shares traded. Both companies said they could not explain the activity.

China Sky Chemical Fibre, which was also queried after jumping 18.4 per cent or 0.7 cent to 4.5 cents on trade of 22.3 million shares, asked for a trading halt to be lifted next Monday, after it announced it had entered a memorandum of understanding with real estate developer Arc Resorts on Jan 19 to buy 10 per cent of its fully diluted share capital. Both parties will agree on a price once China Sky has completed its proposed funding.

A version of this article appeared in the print edition of The Straits Times on March 12, 2016, with the headline 'STI up after investors get over ECB jitters'. Print Edition | Subscribe