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Singapore bulls to regain momentum in coming weeks

SINGAPORE: The Singapore share market's bull run, tripped up last week by fears of a U.S. interest rate rise, should regain momentum in coming weeks as investors once again focus on Asia's economic recovery, analysts said.

The market's outlook remains fundamentally bright and investors have already priced in an official hike of between 25 and 50 basis points in U.S. rates next month, they added.

The Straits Times Index ended down 1.79 points at 2,392.53 on Friday -- for a fall of one percent over the week -- but analysts said the trend was still bullish.

Goldman Sachs head of research Ang Lay Pheng projected the index to firm another 15 to 16 percent towards 2,750 later in the year as regional economies continue to recover.

Goh Keat Jin, strategist for Kim Eng Securities, said there should be good support at 2,320 and 2,247, and that the index could scale new peaks next month.

"I would recommend patiently buying into dips in anticipation of new highs next month. Look out for breaks past 2,440 to improve sentiment and to send the (index) to 2,480 again," Goh said.

Markets world wide anticipate the Federal Open Market Committee to raise rates next month.

But U.S. stocks rallied on Friday, with the Dow Jones industrial average closing at a record high as tame inflation data soothed the concerns about interest rates.

The December Consumer Price Index rose by a less-than-anticipated 0.2 percent, while the core rate, excluding food and energy, advanced 0.1 percent.

In Singapore, Goldman Sachs' favourite stock picks are in manufacturing, consumer growth-oriented and technology sectors, or are companies involved in restructuring.

They include Singapore Press Holdings, OCBC Bank, Singapore Airlines and NatSteel Electronics.

Goldman's target price for Singapore Press Holdings was S$39.33, for SIA S$24.00 and OCBC S$18.90. They closed on Friday at S$35, S$19.60 and S$15 respectively.

Systems integrator Datacraft Asia is expected to unveil its 1999 earnings report possibly on Thursday, and semiconductor foundry Chartered Semiconductor Manufacturing could release its fourth-quarter report on Friday.

Chartered, which had a net loss of US$232 million in 1998, is likely to narrow losses in 1999 to about US$64.5 million, said Daiwa Institute of Research analyst Pranab Kumar Sarmah.

Besides OCBC, analysts also rate Overseas Union Bank and United Overseas Bank as good buys. Both have performed well so far this year.

"Those three will outperform DBS Group this year. Their Malaysian operations will be a very strong growth driver, along with (improvements in) their non-performing loan situations and reversals of the huge provisions they reported in the past," said David Lum, another analyst at Daiwa Institute of Research.-Reuters