STI surges to 8-month high

INVESTORS drove the market to an eight- month high yesterday and signalled their determination to latch on to any good news, no matter how much gloom might be around.

The buying sent the benchmark Straits Times Index up 36.11 points, or 1.57 per cent, to 2,329.08 points - its best close since last Oct 2. The STI is now up 32 per cent this year and 3.7 per cent up on the week.

One of the drivers yesterday was that it was the last day of the month for fund managers and investors to ensure their portfolios ended on the best possible note.

Mr Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors, wrote in a research note: 'Shares managed to rise over the last week and this helped result in another month of gains.

'Investors (have) switched from relief as economic indicators started to point to an end to the recession to worrying more about the timing of the recovery and its strength.'

Executive chairman of NRA Capital Kevin Scully said one sign investors will be looking for to see if this is a genuine rally will come with the release of second-quarter results. This will give them a more concrete idea of whether there is indeed a recovery in earnings.

Meanwhile, fund managers who missed the recent rally and are now underperforming the index have rushed into the market but they are unlikely to take any further new positions.

While not ruling out the prospect of another correction, Mr Oliver said 'we are optimistic that the rebound in shares from their March lows is the start of the cyclical recovery as opposed to just another bear market rally'.

The biggest gainers in absolute terms on the STI yesterday were the companies in the Jardine group, such as Jardine Matheson and Jardine Strategic.

The former rose 80 US cents to US$25.60 while the latter surged by 58 US cents to US$14.20.

However, both stocks are thinly traded in the Singapore market.

City Developments was another big mover, adding 41 cents to end at $9.45. The property player has recovered 48 per cent since the start of the year and is up nearly 15 per cent in the past week.

A general rise in confidence about property counters has helped while CDL has been able to raise asking prices for its projects, such as The Arte. There also seems to be more property launches on the cards.

Other property stocks also rallied. CapitaLand gained 10 cents to $3.80 on volume of 49.1 million shares while Keppel Land gained 14 cents to $2.46 on volume of 25.9 million.

Cosco Singapore leapt nine cents to $1.28, with 79.3 million shares changing hands.

It undoubtedly benefited from the rise in the Baltic Dry Index, a measure of shipping costs for commodities. It climbed again yesterday for the 20th session in a row.

A rise in the index - higher imports of iron ore to China are behind much of the increase - indicates that the economy there may be recovering.

The rise in the oil price to a six-month high of US$65 was probably another factor in the Cosco rise.

It also helped SembCorp Marine gain 16 cents to $3.05.

The top volume counter was China Zaino. Founder and chairman Chen Xizhong pared his stake from about 72.2 per cent to 53.7 per cent.

Mr Chen placed out shares to international funds, the company said. The stock lost three cents to end at 25 cents. Around 172.9 million shares were transacted yesterday.

The general upbeat mood of the market helped Genting Singapore recover two cents to 73 cents after the counter tumbled earlier this week on news that the founding Lim family had sold a 9 per cent stake. Volume was still heavy at 161 million shares.