Shares up at midday on US debt deal; Property firms lead gains

Singapore shares rose over one percent by midday trade on Monday, led by property developers such as City Developments (CTDM.SI), as equity markets in Asia received a boost after U.S. lawmakers reached a last-minute deal to avert a default.

City Developments rose as much as 2.8%, buoyed by hopes interest rates would stay pat in the near term after Washington reached a deal to cut its deficit, traders said.

 

By 12:00 p.m., the Straits Times Index (STI) <.FTSTI> was up 37.27 points at 3,226.53. The total volume of shares traded in was 852.7 million shares and turnover was $968.5 million.

 

This compares with the volume of 1.05 billion shares and turnover of $1.1 billion on Friday. Local traders said they expected gains in the STI to be capped at 3,250 this afternoon.

 

“The Asian markets posted a rally largely attributable to signs of a U.S. debt limit deal. Healthy corporate profits also supported the rally,” said Ng Kian Teck, an investment analyst at SIAS Research.

 

U.S. President Barack Obama said on Monday leaders from both parties reached a deal to cut the budget deficit by US$1 trillion ($1.2 trillion) over 10 years, with additional savings of US$1.4 trillion possible.

 

Property developers Hongkong Land (HKLD.SI) rose 3.1% to US$6.93, while CapitaLand (CATL.SI) gained 1.7% at $2.95 on a volume of 11.2 million shares. This was 1.4 times its average daily volume over the last five sessions.  

“Cyclical stocks like property underperformed last week and there are signs of bargain hunting today as the issue seems to be over,” Ng said.

 

Singapore’s third-biggest lender United Overseas Bank (UOB) (UOBH.SI), which has underperformed its peers in July, rose as much as 2.7% to $21, on hopes it will report strong quarterly earnings boosted by a rise in loan growth, traders said.

 

“Loan growth numbers in June were pretty strong, which have increased expectations that Singapore banks will see more loan growth in the coming months, driven by business loans,” said a local analyst.

 

Singapore said total bank lending in the city state rose 26% to $374.3 billion in June from a year ago.

 

Chinese wastewater treatment firm United Envirotech (UNIT.SI) surged 12.9% after it said private equity firm KKR & Co (KKR.N) would invest US$113.8 million in convertible bonds of the firm.

 

However, shares of Chinese shipbuilder Cosco Corp (COSC.SI) fell as much as 3.9%, ahead of its earnings announcement amid concerns that orders for its dry bulk carriers will be hurt by slowing global trade.