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Singapore shares close higher on weak China data, Dow futures' surge

Tuesday, January 19, 2016 - 17:39
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After a short-covering bounce on Thursday morning that gave a mistaken semblance of stability because it added 30 points to the Straits Times Index (STI), pressure returned in force during the afternoon session, leaving the STI 27.07 points worse off at 2,532.70 at 5pm.

A 200-POINT rise in the Dow futures on Tuesday and the release of weak economic data in China helped the Straits Times Index (STI) bounce 45.47 points or 1.75 per cent to 2,638.47 as traders bet on Wall Street - which was closed on Monday for Martin Luther King Day - rebounding from Friday's devastating loss on Tuesday and more government stimulus in China.

Turnover amounted to 1.24 billion units worth S$1.28 billion, the second highest so far in 2016 after S$1.6 billion was traded on Jan 7. Excluding warrants, the advance-decline score was 306/126.

Over in North Asia, both the Hang Seng and Shanghai Composite indices rebounded sharply from their recent losses while Europe opened in the black in the late afternoon.

News reports suggested the rise came after news that China's economic growth last quarter missed analysts' estimates, while industrial production, retail sales and fixed-asset investment all slowed at the end of 2015.

"This appears to be another example of the 'bad news is good news' reaction function which is notable in that it does point to central bank stimulus still enjoying some potency (in terms of driving asset valuations) with market participants still happy to accept policy largesse in the place of more fundamental drivers," said Rabobank in its report Fundamentals, Schmundamentals.

Up to the end of trading on Monday, the STI's loss from the start of the year had been 289 points. Leading the index on the way down had been the banks and offshore and marine stocks so it came as no surprise that these were Tuesday's largest gainers.