March 25, 2008


STI boosted by news that worst of credit crisis is over

Index rises 103 points on positive signs from global central banks, forex market

By Goh Eng Yeow, Markets Correspondent

SINGAPORE share prices enjoyed their biggest one-day surge since January, as investors dared to believe that the worst might be over in the crisis afflicting global financial institutions.

The reason for the optimistic mood yesterday: Positive news on various fronts that emerged over the long Easter weekend.

For instance, hopes are rising that major central banks around the globe might be getting their act together to solve the global credit crisis by making large purchases of mortgage-backed securities that banks are refusing to accept as loan collateral.

The foreign exchange market also offered comforting signs. The ailing greenback steadied against the Japanese yen and other currencies such as the Singapore dollar.

With Hong Kong, Sydney and London still closed for the Easter holiday yesterday, Singapore and Taipei were the only two big regional bourses grabbing the attention of buyers. In particular, Taiwanese stocks had a great day as the Taiex Index gained 4 per cent.

That was after another piece of upbeat news: opposition candidate Ma Ying-jeou's victory in Taiwan's presidential election - set to ease tensions and boost business with mainland China.

In Singapore, DBS Group Holdings shot up 90 cents to $18 on a heavy volume of 6.7 million shares - making it the biggest gainer yesterday.

Other financials also benefited from the better market sentiment. United Overseas Bank rose 58 cents to $18.72, while OCBC Bank gained 11 cents to $7.86.

This enabled the benchmark Straits Times Index (STI) to rise 102.88 points to 2,927.79 - its biggest one-day gain since Jan 25. With that, the STI has now climbed back to its Feb 29 level.

Some big gainers yesterday were those which had initiated share buybacks as stock prices fell in the past two weeks. These were Singapore Airlines, up 54 cents at $15.02, SembCorp Marine, which was up 12 cents at $3.63, and SembCorp Industries, which advanced 24 cents to $4.10.

The only worry was the moderate turnover of 1.22 billion shares worth $1.49 billion, suggesting that many players are still adopting a wait-and-see attitude.

On the broader market, the FTSE ST China Index rose 6.9 per cent to 405.39 - its first gain in three session, unfazed by a 4.5 per cent drop in Shanghai.

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