STI rises for third day despite weakness in property shares
THE expected plunge in property shares yesterday failed to dent the overall Singapore market, which shot to its third straight positive close.
Yang Huiwen
Tue, Oct 30, 2007
The Straits Times
The gains were spurred by the upbeat sentiment across the region - Hong Kong, India, South Korea and Malaysia all hit records - in expectation of a United States interest rate cut this week.
Hong Kong's Hang Seng Index stole the show by continuing its bull run for a third day. It smashed the 30,000-point barrier last Friday and kept going yesterday to close 1,181.68 points up, or 3.89 per cent, at 31,586.9.
Gains were more modest in Singapore, mainly due to woes among property shares, which fell after the Government axed the deferred payment scheme for new homes last Friday.
Yet despite that bolt from the blue, the Straits Times Index (STI) still added 48.23 points, or 1.28 per cent, to end at 3,819.78. Turnover was a relatively hefty 2.64 billion shares worth $3.16 billion.
Banking shares led the way. United Overseas Bank rose 40 cents to $22, while DBS gained 30 cents to $22.30. The two stocks combined to push up the STI by 11.7 points.
Singapore Exchange reflected the mood, making a substantial 70-cent gain to $15.80.
Hongkong Land defied the local property blues and rose 24 US cents to US$4.96, spurred by gains in Hong Kong property shares.
Digiland was the most active stock, with 317 million shares changing hands but it remained unchanged at 1.5 cents.
Investors across the region have put their money on the expected US rate rise, shrugging off the fact that European bank UBS said yesterday there may be further write-downs due to its exposure to the US sub-prime mortgage markets.
'A Fed cut makes sense. Given there's enough of a downturn, they can go ahead with it,' said Mr David Cohen, economist at Action Economics.
'Asian stock markets will probably continue to celebrate, although the expectation of a rate cut has been priced in already. Most of the other markets, except for Hong Kong, are not back at the highs they reached a week or two ago.'
The November to January period is the 'sweet spot for Asian markets', said Citigroup's chief Asian strategist, Mr Markus Rosgen, in a report yesterday.
'Excess liquidity continues to show positive growth rates and will be supportive of Asian equity markets,' added Mr Rosgen, who expects bourses to peak later this year or early next year.