ecbs better than expected stimulus lifts singapore stocks 108042015

The much-anticipated and larger than expected stimulus package from the ECB sparked a rally across Asian markets and the Singapore exchange was no exception. The SGX signed off Friday on a high note, notching up gains on every single trading session over the last week.

Indices and sectors

The Straits Times Index (STI) ended 41.21 points higher or +1.22 per cent to 3,411.5, taking the year-to-date performance to +1.38 per cent. The FTSE ST Mid Cap Index gained +0.97 per cent, while the FTSE ST Small Cap Index gained +0.23 per cent.

The SGX traded 1800.8 million shares on Friday at a value of $1574.8 million. Gainers outnumbered losers by 324/167.

All the FTSE ST sectors ended in the black except for the Catalist index which fell 0.12 per cent. The biggest gainers were real estate holding and development (+2.31 per cent), industrials (+1.72 per cent) and consumer goods (+1.69 per cent).

Stocks

Suntec Real Estate Investment Trust (SGX:T82U), Singapore’s second-largest REIT by assets under management, said increases in rent and the completion of major renovations helped push up distributable earnings to SG$64.6 million in the fourth quarter, up 11 per cent from the year prior period, according to AsiaOne. Fourth-quarter distribution per unit (DPU) was 2.577 cents, up 0.6 per cent from the same period a year ago.

Keppel Corporation Ltd (SGX:BN4), partly owned by sovereign investor Temasek Holdings, offered Friday to pay SG$4.60 per share of its real estate arm Keppel Land Ltd (SGX:K17) that it did not already own, according to the Wall Street Journal. Keppel Corporation, which owns 54.6 per cent of Keppel Land, will pay SG$3.2 billion in the offer to take the company private.

"This is a sound and well-timed investment in a business which has been integral to Keppel Corp and is in core markets like Singapore, China, Indonesia and Vietnam – where we hold a long-term positive view," said Keppel Corp CEO Mr Loh Chin Hua, explaining the rationale for the offer, according to Channel News Asia.

Trading in both companies, halted last week pending an announcement, will resume today. Keppel Corporation's offer represents a 20 per cent premium on Keppel Land’s last transacted price of SG$3.65 before trading was suspended. This offer finally puts to rest the intense excitement in the Singapore market about the nature of the announcement from these two companies.

"We believe that's one reason why the parent is looking at potential privatisation,” said UOB Kay Hian analyst Vikrant Pandey of the Keppel offer, citing the prevailing deeply discounted prices compared to net asset values of Singapore’s property developers. “I think it's a fair offer to be given at this stage, though some long-term investors might want to hold for a higher price because it's still below the book value," he added according to the Business Times.

Economic news, currency and insight

The ECB finally announced the much anticipated outright monetary transactions (OMT), involving the purchase of €1.1 trillion (SG$1.65 trillion) in private and public debt at the rate of €60 billion (SG$90 billion) per month starting in March 2015 until September 2016. Observing that the ECB had little choice but to deliver upon what would be the fastest balance sheet expansion in its history, City Index Chief Global Strategist Ashraf Laidi said EUR/USD will fail to stage any real recovery above US$1.18 and the break of US$1.12 now appears to be a growing certainty.

Figures released by the Urban Redevelopment Authority show that the vacancy rate for residential property rose to 7.8 per cent in the quarter ended December 31, up from 7.1 per cent in the third quarter, as reported by Business World Online. The vacancy rate is at its highest level seen since the last three months of 2005, and is attributable to a much larger supply of new properties being released onto the market and the declining numbers of expatriates coming to live in Singapore.

The unprecedented fall in oil prices has triggered a slide in Singapore’s consumer prices leading to negative inflation for the second consecutive month in December according to the Straits Times, quoting data from the Monetary Authority of Singapore and the Ministry of Trade and Industry. Following a contraction of 0.3 per cent in November, December consumer prices were again down 0.2 per cent on year. As a result, inflation for 2014 was just 1 per cent, less than half of the 2.4 per cent recorded in 2013 and the lowest since 2009. According to analysts, the weak inflation data underscores the risk of easing measures by Singapore’s authorities.

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