Singapore shares rebounded yesterday on the back of firmer Dow futures and oil prices staying above US$40 a barrel on expectations of a production freeze.
The jolt of optimism sent the Straits Times Index up 1.14 per cent or 31.66 points to 2,810.43, with several key blue chips providing much of the impetus.
Singtel gained 1.3 per cent or five cents to $3.77, Keppel Corp rose nearly 4 per cent or 23 cents to $6 and Sembcorp Industries added 5.5 per cent or 16 cents to $3.06.
Banking counters also helped to fuel the rebound. DBS was up 0.7 per cent or 11 cents to $15.23, OCBC rose 1 per cent or nine cents to $8.73 and UOB gained 1.3 per cent or 23 cents to $18.40.
"The near-term resistance is at 2,850. Any good news from the European Central Bank's meeting (today) will help bring us there," remisier Chung Chun He said.
Mr Sean Quek, head of equity research, Bank of Singapore, remains "positive on risk assets" in the medium term. "We remain optimistic about the global economy but... financial markets are likely to trade in a broad range with higher volatility."
Oil and gas plays were again the most actively traded. Ezra Holdings surged 20 per cent or two cents to 12 cents, with 718 million shares traded. Both Ezra and its subsea services division EMAS Offshore were queried on Tuesday by the Singapore Exchange over unusual volume movements. Both companies responded that they are reviewing options to "enhance shareholders' value", and holding discussions regarding "possible transactions".
UOB KayHian maintained a market weight call on the offshore marine sector, which it says has racked up loss provisions totalling US$2.2 billion (S$3 billion). While shipyards are likely to report further asset impairment, analyst Nancy Wei has top buy calls on Keppel Corp and Ezion Holdings, and top sell calls on SembMarine and Nam Cheong. "In Keppel's fiscal 2015 results, total provisions amounting to $230 million were made for Sete Brasil. We see no cancellation risks on their existing order book that will require asset impairment," she said.
"In Ezion's case, impairments totalling US$81 million on provisions for trade receivables were made in their fourth quarter results."
In comparison, she noted that SembMarine has not provided for asset impairment against the difficult rig-building contracts it is facing and Nam Cheong has yet to provide for asset impairment against vessels in the 2016-17 shipbuilding programmes. Nam Cheong, another actively traded counter, was up 9.3 per cent or one cent to 11.8 cents, with 49.8 million shares traded. Ezion rose 3.3 per cent or two cents to 63 cents, with 44 million shares traded.
Meanwhile, water treatment firm Hyflux soared 11.5 per cent or 6.5 cents to 63 cents, on news that it has secured a letter of intent for a contract to build a US$500 million water and power project in Egypt.