Monday, July 23, 2007

Property market sentiment to continue fuelling share prices

AFP

Singapore share prices are expected to remain robust this week on a continued recovery in the local property market sentiment and on expectations of good corporate earnings, dealers said.

Property stocks were spooked when the Government announced on Wednesday that it was raising a levy on redevelopment projects.

Market participants interpreted the move as aiming to cool a market rife with collective sales of older condominiums to be redeveloped and sold at higher prices.

Dealers said the sell-off was overdone and property stocks regained their bearings.

"The residential market is still very strong. Developers can still pass on additional costs to consumers," said Standard and Poor's Asian Equity Research analyst Yeow Kit Peng.

"The increase in the baseline calculation should have minimal impact on developers' margins as it constitutes less than 5 per cent of total break-even costs," Cazenove analyst George Koh said in a note to clients.

"We believe they can easily pass on the higher costs to buyers given the current strong momentum in the market."

Companies are also expected to report healthy corporate earnings from next week. Among them are shipyards and oil and gas-related firms.

Macquarie analyst Ashwin Sanketh said he expects Keppel to post net profit of $500 million, up sharply from $36 million a year ago.

The Straits Times Index closed at 3,651.38 on Friday.