singapores straits times index surges past the 3500 level on higher volume 473792015

Singapore stocks represented by the Straits Times Index enjoyed a stellar run on Tuesday, surging past the 3,500 level on the back of better-than-expected GDP growth during the first quarter, and despite a lower overnight closing on Wall Street.

Rising turnover with better market breadth has been a feature of the recent sessions on the SGX, pointing to increased retail investor participation.

The stock of the Singapore Exchange Limited (SGX:S68) has risen sharply to its highest level in four years in recent sessions on speculation of the possibility of it joining a trading link between Hong Kong and Shanghai, according to the Wall Street Journal. Macquarie Capital said in a research note that a Singapore-China stock connect “could be a possibility in the next 12-18 months” and could help boost net profit at SGX by as much as 8 per cent. Yesterday, SGX was the second highest gainer on the STI, rising 2.74 per cent to SG$8.63.

Indices and sectors

The Straits Times Index (STI) ended 36.69 points or 1.05 per cent higher to 3,521.08, taking the year-to-date performance to +4.63 per cent.

The FTSE ST Mid Cap Index gained 0.49 per cent, while the FTSE ST Small Cap Index rose 0.45 per cent.

The Singapore Exchange traded a volume of 3,477.9 million shares valued at SG$1,509.3 million. Gainers outnumbered losers by 283/191.

Amongst the FTSE ST sectors, the biggest gainers were telecommunications (+1.87 per cent), basic materials (+1.43 per cent), oil and gas (+1.39 per cent), healthcare (+1.33 per cent) and financials (+1.18 per cent). The top losing sectors were utilities (-2.16 per cent), technology (-0.73 per cent) and industrials (-0.03 per cent).

Noble Group

According to a report in the Wall Street Journal, bankers are closely watching the US$2.25 billion fund raising exercise by Noble Group Limited (SGX:N21), which it launched last week. “Everyone is watching to see whether Noble could receive the same overwhelming response it did from banks last time around,” said one of the bankers invited to join the deal. Noble Group Limited (SGX:N21) has been attacked by research firms such as Muddy Waters and Iceberg Research in recent times, alleging dodgy accounting practices.

Nevertheless, the firm has been successful in tying up US$1.5 billion from 15 bankers.

Stocks

Construction and engineering firm Civmec Ltd (SGX:P9D) announced Tuesday that it had entered due diligence regarding the acquisition of Global Industries Asia Pacific, a subsidiary of energy project management firm Technip. Following the acquisition, Civmec will gain access to a 21 ha waterfront facility in Batam, Indonesia, which it plans to use for in-house multi-discipline engineering facilities and a new venture into deep water pipeline projects, according to Straits Times. "The company believes that the considerable opportunities in the infrastructure and sub-sea sectors as well as the long-term outlook within the oil & gas and mining sectors substantiates the investment in what will be a state-of-the-art and internationally competitive facility," Civmec said in a filing.

Property firm Cedar Strategic Holdings Ltd (SGX:530) announced it is engaging an independent auditor to review its accounts for the financial year 2013 and 2014 to identify any potential irregularity. The company’s response came in the light of a query on April 9 by the Singapore Exchange following unusual volume in the trading of the company’s shares.

Great Eastern Holding Limited (SGX:G07) said it received US$555 million (SG$756.08 million) from the sale of 85 million shares in New China Life Insurance Company at HK$50.65 each, a 3.7 per cent discount to the stock’s latest closing, according to Bloomberg and quoted by Straits Times. Great Eastern took advantage of a 21 per cent rise in New China Life shares since the end of March to sell the stock.

Singapore Technologies Engineering Ltd (SGX:S63) announced that its aerospace division had won new contracts worth SG$298 million during the first quarter of 2015, including a five-year maintenance, hourly basis, agreement signed with an Asian airline customer that operated a fleet of Boeing 737 NG aircraft.

Singapore Press Holdings Limited (SGX:T39), a media and property company, said its second-quarter net profit declined 14.4 per cent to SG$69.6 million amidst a challenging business environment that affected its core publishing operations, as reported by TODAY. Operating revenue fell 3 per cent to SG$270.3 million. “The global economic outlook has softened recently with uneven recoveries seen across the economies. Significant headwinds continue to persist, as concerns remain unabated over interest rates, a deflationary spiral in Eurozone and the slowdown in the Chinese economy,” said SPH chief executive Alan Chan.

First Real Estate Investment Trust (SGX:AW9U) announced a record distribution per unit of 2.06 Singapore cents during the first quarter ended March 31, 2015, well above the 1.99 cents it paid a year ago. Gross revenue jumped 10.1 per cent to SG$24.7 million, while net property income was higher by 9.3 per cent, according to Business Times.

Keppel Telecom. & Transport. Ltd. (SGX:K11) said net profit during the first quarter ended March 31 increased 2.3 per cent to SG$15.8 million, despite a decline in revenue by 1.6 per cent, according to Business Times.

Economic news, currency and insight

Singapore’s Ministry of Trade and Industry announced Tuesday that the economy grew by 2.1 per cent on a year-on-year basis in the first quarter of 2015, the same as that achieved in the preceding quarter, based on advance estimates. This was better than the median forecast of 1.8 per cent in a Reuters survey. For the full year, the government has forecast a GDP growth of 2-4 per cent, versus the 2.9 per cent growth the Singapore economy recorded in 2014.

The Monetary Authority of Singapore (MAS) said it will continue its “policy of a modest and gradual appreciation” of the Singapore dollar. As a result, the Singapore dollar turned sharply higher rising nearly 1.1 per cent to SG$1.35975 per U.S. dollar by mid-morning, according to Straits Times.

Daniel Martin, Capital Economics commented in the Straits Times: “Given the MAS's lingering concerns about medium term inflation prospects, it seems safe to say that it will not be loosening policy again anytime soon. And by the time of its next scheduled policy meeting in October, inflation will be creeping back up and the global economy should have gained a stronger footing…the most important decisions that will affect monetary conditions in Singapore over the coming years will not be made by the MAS, but by the US Fed…Already, local interbank rates have started to rise ahead of expected hikes by the US Fed later in the year. Further increases in local rates are likely to lie ahead and will serve to cool credit growth even further."

The monthly update on property resale prices by SRX Property showed that private non-landed resale prices in March 0.2 per cent February, and fell 3.9 per cent from March 2014. Commenting on the index, OrangeTee Research manager Wong Xian Yang said Tuesday that the prices may be stabilising given the lower volatility noted in the overall SRX resale index, according to Straits Times. "New information has to come in, such as the tweaking of cooling measures or a higher than expected hike in interest rates, before we see any large price movements in the market," he said.