STI Sharply Higher, Olam Surges After Stock Buyback News
By Donavan Lim
Underpinned by news of a EUR100-billion bailout of Spanish banks coupled with a better-than-expected trade data from China, investors pile on equities with a vengeance.
The benchmark STI closed at 2,787.81 surging 49.92 points or 1.82 per cent higher on Monday.
Commodities counters, which were one of the worst performers last week, staged a rally. Supply-chain manager Noble Group edged up 4.1 per cent to S$1.14 and palm oil play Golden Agri-Resources gained 4.2 per cent to S$0.620.
Olam International rose the most in more than seven months as it chalked up 8.9-per cent gain to S$1.77, after announcing plans last Friday to purchase up to 10 per cent of its shares from the market in a buyback programme.
The company is buying back shares to reflect “the confidence that Olam’s board has in the long term fundamentals and growth prospects of the group,” Chief Executive Officer Sunny Verghese said in a statement.
Shares of Olam, one of the top three suppliers of rice, cocoa and coffee, has declined 18 per cent this year as commodity price volatility eroded profit.
Property plays also participated in the rally. Counters such as CapitaLand and City Development edged higher by 3.1 per cent and 2.0 per cent respectively.
Despite sharp gains, investors are urged to exercise caution due to recent volatility. This rally could easily become a dead cat rebound should the eurozone crisis worsens.
With Greece’s election on June 17 and talks of Italy being the next Spain, the bears could be lurking to stage a comeback.