Thursday, 5 August 2004

STI surges to highest since 2001

The Straits Times Index surged today, rising 31.85 points or 1.7 percent to 1,935.70, its highest close since February 2001. Declining oil prices helped boost Singapore stocks, as well as stocks in Korea and Taiwan.

The Singapore market was probably also helped by positive sentiments generated by good results from two of the country's leading companies.

Yesterday, Creative Technologies reported that its fourth quarter ending June jumped 43 percent from last year to S$11.4 million, helped by strong sales of MP3 players and other personal digital entertainment devices. Sales rose 35 percent.

SingTel reported a net profit of S$700 million for the first quarter to June, down 41.5 percent from the corresponding quarter last year but beating analysts' forecasts for a gain of S$579-600 million. The steep drop in profit was due to exceptional gains reported for last year.

The STI has now decisively broken the 1,900 level which had been a resistance earlier this year. Normally, this is a good sign, but the rise appears narrowly based. The broader All-Singapore Equities Index was up a smaller 1.2 percent, while the small-cap UOB Sesdaq Index was up only 0.6 percent and, at 95.52, remains 21 percent below its 2004 high of 121.02 in February.

The technical picture is still unclear, but the divergence may be indicating that the bull market may be on its last leg.

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