Shares gain by midday; 2,780 cap seen

Singapore shares rose on Wednesday, but gains were limited as most investors stayed on the sidelines ahead of the conclusion of a Federal Reserve policy meeting where more steps to stimulate the flagging U.S. economy could be announced.

 

At 1:00 P.M., the Straits Times Index (STI) <.FTSTI> was up 0.46%, or 12.72 points, at 2,793.56. The total volume of shares traded was 508 million shares and turnover was $479.9 million.

 

This compares with volume of 530 million shares worth $357 million on Tuesday. Local traders said they expected the STI to trade within a tight 2,750-2,800 band for the rest of the session.

 

“The overall view is that the Fed needs to comes up with something more than what the market is expecting to really lift the markets,” said Jason Hughes, head of premium client management at IG Markets in Singapore.

 

The Fed is expected to announce plans later on Wednesday after its meeting to rebalance its portfolio in favour of longer-dated bonds and so push long-term interest rates — already near historic lows — even lower in a move known as Operation Twist.

 

United Overseas Bank (UOBH.SI) was among the biggest gainers on the benchmark index, after CIMB Research said the bank was its top pick in the sector, offering the most potential upside after taking into account growing concerns of a recession. The brokerage also downgraded DBS Group (DBSM.SI) to underperform from outperform, and said its earnings were the most sensitive out of the three Singapore banks to another recession, as its capital market-related fees are the highest and would shrink in an economic downturn. 

 

UOB shares were 1.8% higher at $17.85 while DBS gained 0.16% to $12.35.

 

Construction firm Lian Beng Group (LIBG.SI) rose as much as 5.6%, extending recent gains, on news it plans to spin off its engineering and concrete units in Taiwan, and as brokers highlighted its attractive valuations.

 

By midday, Lian Beng was traded at $0.375 with over 14.8 million shares changing hands. This was 7.3 times its average daily volume over the last five sessions.