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Singapore shares close flat ahead of key ECB meeting

Thursday, December 3, 2015 - 17:34
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A LARGE afternoon bounce in the Dow futures and a firm opening in Europe ahead of a key European Central Bank (ECB) policy meeting helped the Straits Times Index on Thursday reverse a 20-point loss and finish a net 0.25 higher at 2,883.89.

It was the index's third consecutive rise and brought its three-day gain to 29 points or just over one per cent. Volume amounted to 1 billion units worth S$955.3 million and excluding warrants there were 182 rises versus 222 falls.

The ECB on Thursday is widely expected to unveil enhanced monetary stimulus measures aimed at helping the eurozone achieve its inflation targets and boost growth. These hopes come from strong hints last month from its president, Mario Draghi. Among the measures anticipated are a cut in deposit rates, an extension of the ECB's "quantitative easing" stimulus into 2017 and an increase in the pace of bond purchases.

In the offshore marine sector, shares of SembCorp Marine (SMM) continued their slide following a profit warning earlier this week with a S$0.075 or 3.8 per cent fall to S$1.895 with 4.3 million traded.

Although most analysts have issued a "sell" on the stock, Nomura retained its "buy", albeit with a reduced target price from S$2.82 to S$2.16, the latter based on the trough valuation of 1.4x price/book during the Great Financial Crisis (GFC). "We keep our Buy rating on reasonable share price valuation that is below GFC levels, and given SMM's healthy S$3.2 billion order wins year-to-date that are related to production units and specialised crane vessels for field development phase," said Nomura.