Singapore’s Straits Times Index climbed in the morning session on Thursday, ouperforming regional markets, getting a boost from index heavyweights Singtel and the three banks.
The STI was up 1.34 percent at 3242.82 at 10:34 A.M. SGT, outperforming Japan’s Nikkei 225, which was up around 0.19 percent, South Korea’s Kospi, which was down 0.1 percent and Hong Kong’s Hang Seng Index, which was off 0.64 percent.
Singapore’s heavily weighted banks gave the index a big fillip, with DBS up 2.08 percent at S$25.51 at 10:51 A.M. SGT, while OCBC was up 0.72 percent at S$11.26 and UOB added 1.41 percent to S$27.28.
The banks may be bolstered by the latest minutes from the U.S. Federal Reserve’s 31 July-1 August meeting, which showed the central bankers discussed raising interest rates soon, but were also concerned about the risks of the U.S. trade war to the economy.
“A September Fed hike is even more of a slam dunk,” Derek Holt, head of capital markets economics at Scotiabank, said in a note on Wednesday. “There is no indication that they are altering their assessment of the balance of risks in such fashion as to cast doubt upon continuing to hike at a gradual pace after hiking in September. That still leaves the door open to a fourth hike later in the year.”
Banks’ earnings generally benefit from higher interest rates, which boost net interest margins.
Shares of heavyweight telco Singtel also surged, rising 6.17 percent to S$3.27 by 11:00 A.M. SGT, boosted by reports on Wednesday that TPG Telecom was in merger talks with Vodafone Hutchison Australia, a move which could ease competition pressures.
“A successful M&A would imply Singtel having to deal with one less competitor in Australia, which we believe is a positive catalyst in the short term,” Daiwa said in a note on Wednesday. It upgraded the stock to Outperform from Hold.