Singapore shares inched higher by midday, extending gains for the fifth session, on hopes of progress in talks to resolve a “fiscal cliff” in the United States, but gains are likely to be capped by a U.S. Federal Reserve policy decision due later this week.
By 1:31 p.m., the benchmark Straits Times Index rose 0.5% to 3,129.45, while the MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.3%.
Goldman Sachs expects oil prices to fall in the coming years due to new supply from shale sands, helping to boost corporate profits which will support stock prices in Asia. Asian stocks have gained 3.9% since the start of November.
“Something that has been a headwind for global growth has become a tail wind,” said Andrew Tilton, Goldman’s chief economist for the Asia-Pacific.
Goldman upgraded Singapore to ‘overweight’ and has a 12-month target of 3,500 points for the STI, citing its attractive valuations and as it favours cyclicals compared to defensive stocks going into 2013.
By midday, stocks sensitive to economic cycles such as palm oil firm Golden Agri-Resources rose 2.3% to $0.66 while casino operator Genting Singapore Plc gained 2% to $1.295.
“We see (Singapore) as an attractive way to trade the ASEAN growth story given its linkages with the fast growing ASEAN emerging economies,” said Goldman in a report, forecasting earnings per share growth of 7 and 14% for 2013 and 2014, respectively, in the country.
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