STI posts biggest one-day jump in almost 3 months
THE Singapore stock market posted its biggest one-day gain in almost three months yesterday, as the wave of investment funds washing around Asia gave the bull run renewed vigour.
Alvin Foo
Tue, Jul 10, 2007
The Straits Times
The Tokyo market rose 0.67 per cent to hit a seven-year high, buoyed by strong local industrial data, while Hong Kong ended at a record high for the fifth straight session, rising 1.3 per cent. Indonesia and South Korea also closed at all-time records, while Taiwan reached a seven-year peak.
Capital flows into the region from private equity firms and hedge funds seeking higher yields have shot up dramatically this year. For example, in the first five months, about US$1.1 billion (S$1.67 billion) in new foreign money was reportedly sunk into funds investing exclusively in Singapore, while Malaysia drew US$507.1 million.
The spectacular opening to the week caught many by surprise as analysts had predicted a quiet week as investors await new leads from upcoming corporate earnings reports.
The STI hit an intra-day high of 3,629.44 points - just 10 points shy of its June 21 all-time record of 3,639.49. About 4.58 billion shares worth $2.56 billion changed hands, with gainers far outpacing losers by 633 to 263.
The Singapore market got a boost from domestic factors, analysts said. This included optimism stemming from a speech by Minister Mentor Lee Kuan Yew on Saturday, and speculation that the economy grew at a faster pace last quarter.
There was upbeat news yesterday that the Ministry of Trade and Industry is expected to announce today an annualised 7.7 per cent growth in the three months ended June 30. The figure came from a Bloomberg News survey of economists, and is 0.1 percentage point higher than the 7.6 per cent first-quarter growth figure.
Banking counters DBS Group Holdings, United Overseas Bank (UOB) and OCBC Bank, whose gains made up more than a third of the STI's rise yesterday, had a strong showing. DBS shares rose 70 cents to $23.60, UOB picked up 40 cents to $23.10 and OCBC gained 15 cents to $9.40.
Daiwa Institute of Research banking analyst David Lum said of the bank counters: 'They've generally been laggards, and continue to offer good value. MM Lee's speech over the weekend may have resulted in the bullish sentiment.'
Looking ahead, he added: 'I expect fairly positive interest ahead of the second-quarter results, especially for DBS and OCBC.'
On Saturday, Mr Lee sketched a rosy picture of a more vibrant Singapore in five years, calling it the 'golden period', adding it could stretch out over many years if there were 'no wars or oil crises'.
Marine and property counters also registered gains yesterday.
Shares of shipbuilder Cosco Corp gained 30 cents to close at an all-time high of $4.26, on hopes that the firm will divest itself of its shipping arm. Neptune Orient Lines also soared, rising 35 cents to $5.70, after Morgan Stanley raised its price target to $5.45 from $4.30.
As for property stocks, City Developments gained 40 cents to end at $17.20. This followed news on Saturday that it had sold 90 per cent of units on sale at its Cliveden condominium in Grange Road for an average of $3,600 per sq ft.