Half-year report: Shares up 39%

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SHARES listed on the Singapore stock market ended the half-year 39 per cent higher than on Dec 31, bringing total market capitalisation at yesterday's close to $545 billion.

The dramatic gain in market capitalisation - up from $329 billion just six months ago - came on the back of the sighting of green shoots and the loosening of credit markets. Also, commodity prices have surged due to China's planned infrastructure spending and expectations that the United States' commodities demand may soon recover.

SingTel retains its crown at the top of the bourse, with a market capitalisation of $47.8 billion, after an 18 per cent increase over the last six months.

Market capitalisation is calculated by multiplying a company's share price by the number of its common shares.

SingTel was followed by agri-business group Wilmar Holdings at $32 billion and DBS Group Holdings at $26.9 billion.

Wilmar's market capitalisation had jumped a massive 80 per cent. Another commodities player, Noble Group, took the 19th position, increasing its market capitalisation by 83 per cent since Dec 31 to $6.17 billion.

The property sector also saw many counters bouncing back after taking a pummelling at the height of the bear run. Sharp gainers included Keppel Land, City Developments and Yanlord.

Experts have mixed views on when the market will bounce back to the $677 billion value it saw in June last year.

'I'm of the view that earnings expectations will start to improve as we push closer towards an economic recovery from later this year,' said Dr Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors.

'Commodity plays will probably be an outperformer over the years ahead, as China's industrialisation proceeds and supply remains constrained,' he said.

Mr Shek Chee Seng, chief executive of Reliance Asset Management Singapore, who spoke in his personal capacity, was more cautious.

'I think the run-up since March has gone ahead of the fundamentals. With the Singapore economy still showing signs of weakness, the second-quarter earnings announcements may surprise on the downside.'

Some analysts reckon the shares of the three local banks may be moving ahead of their future earnings performance. At these levels, the shares are already pricing in an earnings recovery scenario, as well as a likely reversal of some of the paper losses on their investments.

'While earnings will be better than what was expected at the start of this year, they remain below the expectations back in mid-2008. A scale-back to the previous peak may have to wait till next year,' said JPMorgan analyst Sunil Garg.

Experts believe investors have largely priced in a second-half recovery. Instead, investors will be looking for reassuring comments about the future which, if forthcoming, will fuel further market gains.

'There could be some disappointments but, a correction aside, I do not see a significant downside risk,' said Dr Marc Faber, who told investors to bail out of US stocks before the 1987 Black Monday crash. 'March lows are most unlikely to be broken and, within a year, stocks could be up another 30 per cent.'

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