STI closes 0.68% higher on Wednesday as spotlight falls on bank earnings

LOCAL shares made mild gains on Wednesday, on hopes that US law-makers will reach an agreement on the next round of fiscal stimulus, to safeguard the global economic recovery.

More capital had poured into treasuries and gold the night before, with the yellow metal soaring past US$2,000 per ounce for the first time in history.

The Straits Times Index (STI) closed in the green, rising 16.99 points or 0.68 per cent to 2,532.69. About 1.64 billion securities worth S$1.41 billion changed hands on Wednesday. Gainers outnumbered losers 284 to 169.

Top gainer Venture Corp advanced 66 Singapore cents or 3.64 per cent to S$18.80, after DBS Group Research raised its target price from S$15.90 to S$20.70 on Wednesday. The electronics manufacturing services firm reports earnings on Friday evening.

Yanlord Land surged eight Singapore cents or 6.56 per cent to S$1.30 after it said that it had inked an investment agreement with a GIC affiliate to co-invest in residential projects in China.

Bank earnings will be in the spotlight for the rest of the week. DBS Group and United Overseas Bank will both report earnings before the market opens on Thursday. OCBC will report earnings on Friday morning.

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Investors were disappointed last week when Singapore's financial regulator called on local banks to cap FY20 dividends at 60 per cent of the amount paid in the previous financial year, and offer scrip dividends in lieu of cash.

But "mandating prudence on capital usage is largely in line with regulators' cautious stance globally, reflecting the extent of the pandemic's impact", wrote Bank of Singapore analysts in a recent note. "In this respect, Singapore banks are still relatively less constrained than European banks for example, which have been restricted on all dividends and share buybacks this year."

Regional markets lacked direction. The Hang Seng Index rose 0.62 per cent; the KLSE fell 0.50 per cent. The Shanghai Composite rose 0.17 per cent, and the Nikkei fell 0.26 per cent.