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Singapore stocks close higher, helped by rise in Dow futures, China's rebound
AFTER dropping 58 points on Monday and Tuesday, the Straits Times Index rebounded 31.66 points to 2,810.43 on Wednesday, albeit in lower volume of two billion units worth S$1.2 billion, compared with S$1.4 billion on Tuesday and S$1.5 billion on Monday. Excluding warrants, there were 243 rises versus 147 falls.
The rise was led by Keppel Corp and Sembcorp Marine, the former recovering from a 7 per cent collapse on Tuesday by gaining S$0.23 or 4 per cent to S$6 on volume of 13.3 million. Providing the backdrop was a 50-point rise in the Dow futures which suggested Wall Street would also rebound from its Tuesday loss during its Wednesday session. Over in China, stocks halved their earlier loss with reports suggesting this was thanks to state-backed buying.
On Tuesday, Keppel's shares lost S$0.43 on news that five jack-up rigs being built for US-listed Transocean have been rescheduled for delivery to 2020.
In reiterating its "sell'' on Keppel with a S$4.24 target, Maybank Kim Eng said Transocean is essentially saying that they do not need any new rigs until 2020. "Given that jackup rigs need two years to construct, this may imply that the rigbuilding industry may not see a meaningful recovery in rig orders until 2018," said the broker.
"In a way, a deferment for an extended period is not much different from cancelling the contract and making a fresh order again much later."