Asian bourses rebound on Wall St rally (ST)

BackJan 15, 2010

ASIAN markets regained their poise yesterday as investors took their cue from Wall Street's overnight rally and went on a bargain-hunting spree.

This was despite the widespread jitters set off on Wednesday by China's decision to raise the level banks must set aside as reserves - a move sparking fears of a screeching halt to the regionwide rally led by red-hot Shanghai.

Brushing this aside, the benchmark Straits Times Index (STI) in Singapore regained the 2,900 level as it rose 21.14 points, or 0.61 per cent, to 2,909.52, spurred by gains in financial and property counters.

Tokyo's Nikkei 225 Index gained 1.61 per cent and Seoul's Kospi Index rose 0.86 per cent while Shanghai, the epicentre of Asia's losses on Wednesday, was up 1.35 per cent.

On Wednesday, the Dow Jones Industrial Average in New York had gained 0.5 per cent to 10,680.77 points.

Still, some uncertainties lingered, leading Hong Kong's Hang Seng to lose 0.15 per cent after spending most of the trading day in positive territory.

Generally, though, some analysts are confident China will not do anything drastic to derail the rally.

Mr Shane Oliver, AMP Capital Investors' head of investment strategy, noted that while further tightening in China's monetary policy could be expected, he did not expect such a trend to threaten this year's upswing in share prices.

'China is a long way from undertaking a draconian tightening designed to crunch growth. We continue to expect Chinese gross domestic product growth of around 10 per cent this year,' he said.

Indeed, any sell-off was viewed as an opportunity to lay even bigger bets while the balmy trading conditions persisted.

At home, this helped overall market volume stay at a hefty 2.38 billion shares worth $1.8 billion. Investors shrugged off caution - buying across the board.

Among the blue-chip gainers was Singapore Press Holdings (SPH), jumping 16 cents to $3.82 on a heavy volume of 16.9 million shares. Citigroup raised its call on the counter from hold to buy, noting that the media group's first quarter results were in line with expectations.

'SPH is a defensive alternative for investors if the current STI rally loses steam. It is further supported by a 6.5 per cent dividend yield,' it added.

Telecoms giant SingTel rose five cents to $3.02 with 24.9 million shares traded, amid talk that it might float its Australian unit Optus as a separately listed firm.

Property and financial counters also rebounded as jitters over China's monetary tightening subsided. DBS Group Holdings, which has extensive operations in Hong Kong, rose 10 cents to $15.12, while property giants City Developments gained 12 cents to $11.74 and CapitaLand rose five cents to $4.26.

On the broader market, profit-taking took a toll on some counters. Abalone producer Oceanus Group fell 0.5 cent to 43.5 cents on a volume of 71.4 million shares.

Steel products supplier Novo Group dropped four cents to 23 cents with 70.5 million shares traded. It said that it had scaled back the size of its private placement from 88 million shares to 60 million shares at 23 cents apiece.