Singapore shares close higher in line with Wall Street

WALL Street continued its recovery on Monday and this helped the Straits Times Index (STI) jump 46.16 points or 1.6 per cent to 2,897.41 on Tuesday, bringing its two-day rebound to 105 points or 3.8 per cent.

Once again it was blue chips which provided most of dollar volume - of the whole market's 1.5 billion units worth S$1.2 billion that was traded, S$944 million or 79 per cent was done in the 30 STI components. Excluding warrants, there were 263 rises versus 138 falls.

Among the banks, OCBC ended S$0.11 higher at S$9.06 on volume of six million. Nomura in a Oct 1 Quick Note on OCBC said that it continues to have a "buy" rating on the stock as it believes the bank has strong risk management and a strong balance sheet which will serve it well during this cyclical downturn.

"In addition we believe higher interest rates in Singapore will help cushion its net interest margins from downside pressure from its overseas operations," said Nomura. "We view the current valuations of 1x 12-month forward book as a good entry point."

In the property sector, CapitaLand finished S$0.07 stronger at S$2.95 with almost 20 million done. Macquarie Warrants (MW) in its daily newsletter noted that over the last three months, CapitaLand's shares have corrected by 22 per cent, underperforming the STI by six percentage points and Chinese developers under Macquarie Equities Research's (MER) coverage by seven percentage points.

"CAPL is one of MER's top picks in Macquarie Marquee Ideas, Singapore Strategy and the Asia Property sector. Trading at 0.67x price per book value (PBV) and at a 46 discount to its RNAV (five-year avg: 36 per cent), MER thinks shares are undervalued. CAPL is on track to reach 8-10 per cent ROE, with above-sector earnings per share (EPS) growth momentum over the next two years," said MW.