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STI Rises on Hopes of Central Banks’ Actions

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by Donavan Lim

Singapore shares edged higher on Wednesday on hopes that central banks will introduce a fresh round of monetary policy easing to revive a slowing global economy.

The Purchasing Managers’ Index in China unexpectedly fell to 50.1 in July, the weakest in eight months, from 50.2 in June adding hopes that the world second largest economy will lower interest rates.

“In the current environment, bad economic data is good news as it increases the chances of easing monetary policy in China. While stimulus packages are being quietly rolled out regionally, the markets would love to see a national stimulus package to show how keen the Chinese government is on guiding the economy away from any sort of hard landing,” said Justin Harper of IG Markets.

At the same time, investors are hoping that FOMC meeting later tonight will yield good news.

The 30-share Straits Times Index closed 0.5 per cent higher, or 14.68 points, at 3,051.08.

Hongkong Land was the STI’s top gainer, rising 8.3 per cent to end at S$6.50 on hopes of further Chinese easing as well as reports stating that the developer had received a record-breaking offer for one of its properties.

CapitaLand edged up 1.3 per cent to S$3.04 as the property developer remains relatively positive about the Chinese property market at its second quarter results briefing.

Wilmar International, managed to rebound today, gaining S$0.02, to close at S$3.26. The world’s biggest palm oil trader came under intense selling pressure after it announced that is has been advised by the Chinese authorities to cap cooking oil prices.

It was a mixed performance for other commodity counters. Olam International closed at S$1.875, up S$0.03 while Noble Group closed flat at $1.075.

Regionally, the Hang Seng Index ended at 19820.380 while the Nikkei 225 Index closed slightly lower at 8641.850.

“Looking forward to tonight, traders will be keenly anticipating the outcome from the FOMC meeting, along with the ECB meeting tomorrow.

With the markets hoping for strong decisive action, anything short of this could lead to negativity creeping back into the markets,” stated Donal Nee of CMC Markets.