STI rebounds, thanks to bottom fishers

STI rebounds, thanks to bottom fishers
PHOTO: The Straits Times

Bargain hunters helped local shares rebound yesterday, but analysts believe this is simply a blip with more declines to come.

The benchmark Straits Times Index gained 42.9 points, or 1.51 per cent, to close at 2,886.29.

Investors were all in - some 2.08 billion shares worth $2.18 billion changed hands.

"It was a technical rebound driven by bottom-fishing bargain hunters because the markets were over-extended," said remisier Desmond Leong.

Several other regional bourses recovered some ground too - Hong Kong gained 0.72 per cent, Sydney rose 2.72 per cent while Seoul advanced 0.92 per cent.

Shanghai stocks, however, extended their losses, plummeting 7.6 per cent in their worst four-day rout since 1996, while Tokyo dropped 4 per cent to a six-month low.

"I have a lot of concerned clients because they saw the STI plunge more than 100 points on Monday, so people were panicking and worrying," said remisier Alvin Yong.

"Others were opportunistic, and I told them to buy, and that blue chips offer the best bet."

Blue chips were certainly among the winners yesterday, with banking stocks leading the gains.

DBS Group added 25 cents to $17.90, OCBC Bank rose 26 cents to $8.96 and United Overseas Bank climbed 70 cents to $19.25.

Commodity plays were mixed. Noble Group, which has been under pressure amid accusations of accounting fraud and governance lapses, added 5.5 cents to 46.5 cents.

However, Olam International dropped four cents to $1.70, Wilmar International lost three cents to $2.78 and Golden Agri-Resources was flat at 29 cents.

Despite the recent market turbulence, the Singapore Exchange noted yesterday that the three largest media firms on the bourse have made an average gain of 7 per cent since the end of June.

"Together the three stocks - Singapore Press Holdings (SPH), Asian Pay Television Trust and mm2 Asia - have marginally outperformed the MSCI World Media Index in the year thus far, while maintaining a similar price-to-earnings ratio and varied price-to-book ratios," the SGX said.

SPH dropped four cents to $3.91 and mm2 Asia lost half a cent to 59.5 cents yesterday, while Asian Pay Television Trust was flat at 79 cents.

Thai Beverage slipped 1.5 cents to 71 cents. OCBC Investment Research analyst Jodie Foo has maintained a "buy" call on the stock, noting that there are concerns the firm's earnings will be affected by reduced tourism to Bangkok after last week's bombing.

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