Bulls And Bears

STI up despite talk of technical recession

Investors get break from sell-offs as Chinese markets were closed for victory celebrations

With Wall Street having rebounded overnight and Shanghai markets shut for a holiday, Singapore stocks enjoyed a respite from recent sell-offs to end almost 1 per cent higher yesterday.

Shares in New York rose by nearly 2 per cent on Wednesday on bargain-hunting, despite persistent concern about slowing global growth. In Singapore, economists are talking about a possible technical recession, after data released on Wednesday showed factory activity continued to contract last month.

DBS Group Research warned in a note yesterday: "With the likelihood that the economy could already be in a technical recession, risk is rising that full-year growth could fall short of the official forecast range of 2 to 2.5 per cent."

Yet the benchmark Straits Times Index rose a healthy 28.3 points, or 0.98 per cent, to close at 2,906.43.

Other regional markets were mixed. Tokyo firmed for the first time in four days, gaining 0.7 per cent, while Seoul ended flat and Sydney dropped 1.4 per cent. The Hong Kong bourse was closed.

"One modest positive today is the fact China is offline for its Victory Day commemorations," said Mr Chris Weston, a Melbourne-based chief markets strategist at IG, in an interview with Bloomberg yesterday. "So traders and investors will be focused on domestic data, valuations and trying to understand how to navigate these crazy markets."

Sembcorp Marine rose two cents to $2.37 and Keppel Corp gained six cents to $6.79.

CIMB Research released a note yesterday in which analyst Lim Siew Khee maintained her "neutral" call on the offshore and marine sector. She pointed to prolonged weakness in the rigbuilding industry and said the two companies are receiving "chunkier" new orders that take a longer time to come to fruition.

CapitaLand climbed a cent to $2.80 after announcing that its unit The Ascott had recently secured new contracts to manage more than 850 units in four cities in Asia.

OCBC Investment Research analyst Eli Lee maintained his "buy" call on the stock, noting: "We are overall positive that Ascott continues to show good growth in its portfolio; the group is now the world's largest global serviced residence owner and operator."

Other property plays were mixed. City Developments was unchanged at $8.55, Far East Hospitality Trust slipped half a cent to 61 cents and Wheelock Properties added half a cent to $1.505.

CDW, a maker of mobile phone components, fell 0.1 cent to 17 cents. RHB Securities slashed its rating on the counter to "neutral", citing a weak outlook.

A version of this article appeared in the print edition of The Straits Times on September 04, 2015, with the headline 'STI up despite talk of technical recession'. Print Edition | Subscribe