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Singapore's STI bucks Asia's downtrend to end firmer

The Straits Times Index (STI) rose for the sixth straight session, ending 4.45 points, or 0.15 per cent, higher at 3,039.90.

SINGAPORE: Shares in Singapore bucked Asia's downtrend on Thursday to close on a mixed note.

The Straits Times Index (STI) rose for the sixth straight session, ending 4.45 points, or 0.15 per cent, higher at 3,039.90.

The STI has been rebounding from losses suffered last week, when it fell below the 3,000-point level, hitting its lowest in one-and-a-half years.

In the broader market, losers outnumbered gainers by 268 to 174 as investor sentiment remained weak.

Volume totalled 1.84 billion shares valued at S$1.01 billion.

Some analysts warn that the recent run-up could be a blip in a bear market -- and more downside may be in store.

An area of concern is the potential risks associated with the property market which is vulnerable to rising global interest rates.

Roshan Padamadan, a fund manager at Luminance Funds, said: "We see more downside than upside at the current levels. Singapore, we should remember, has a very heavy cyclical bet in the STI -- for example, there are a lot of banks (and) we have property developers.

"And banks of course, their collaterals are ultimately property for the most part -- they have a lot of mortgage books, half their books are in Singapore -- for all the major banks. So there is significant linkage to property."

The concern is that some households may be over-leveraged and will not be able to cope if the interest rates go up to, say, 3 or 4 percent. These households may have to sell their property, which could affect overall property prices and sectors that are exposed to the property market.

Market watchers say another thing to watch for, going forward, is the rate at which the US unwinds its stimulus measures. This could confuse investors, leading to more market volatility.

However, optimism about the US economy and recent positive trade data out of China should help prop up sentiment.

Liu Jinshu, lead analyst at Voyage Research, said: "So long as economic data continue to be positive, we may see the STI moving upwards in a gradual manner.

"For the STI to reach levels like 3,200, 3,300, most likely it will be a drawn-out thing, taking several quarters.

"The bottoming could be long drawn, my guess is investors would have priced in the tapering and the interest rate environment only recently."

Corporate earnings will also be closely-watched.

Analysts say investor confidence may not return significantly should corporate earnings remain tepid. 

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