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Singapore shares close higher after rallies in Japan, China and Dow futures
A 7.7 per cent jump in Japan's Nikkei Average after announcement of a cut in corporate tax, a 4 per cent rise in Hong Kong's Hang Seng Index and a 180-point jump in Dow futures on Wednesday helped the Straits Times Index (STI) extend its rebound into a second consecutive day, this time adding 42.86 points or 1.5 per cent to finish at 2,928.18.
Volume was 1.33 billion units worth S$1.24 billion and excluding warrants there were 308 rises versus 114 falls. The rise brings the STI's two-day recovery to a total of 76 points or 2.7 per cent.
Apart from Japanese stocks turning in their best one-day performance since 2008, two announcements added to either the urge to buy or to cover one's short positions.
The first was a Chinese Ministry of Finance statement noting that it will look to "strengthen fiscal policy, boost infrastructure spending and speed up reform of its tax system".
The second was World Bank chief economist Kaushik Basu's warning to the US Federal Reserve that it should refrain from raising rates in September given the increased uncertainty about Chinese growth going forward. This follows a similar warning from the International Monetary Fund recently.
Banks led the rise for a second day. Morgan Stanley in its Sept 9 Asean Financials report said Singapore banks remain the best-positioned in Asean for Morgan Stanley's base-case rate environment. It said it prefers DBS and OCBC.