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Singapore's shares ended 2012's penultimate session in the green, but while hopes the U.S. would avoid dropping off the fiscal cliff as negotiations are set to resume bolstered the market, caution persisted.
"The markets are hopeful," said Alvin Liew, senior economist at UOB. But he added, "Let's not hold our breath." He expects lawmakers may patch up a temporary deal, perhaps a three-month extension. "Judging by the last two years of American politics we've seen so far, you wouldn't be too hopeful of a grand bargain coming out in the next few days. If so, it would be the biggest surprise of 2012."
The 30-share Straits Times Index ended up 7.87 points, or 0.2%, at 3191.80, totting up a total 0.9% gain for the holiday-shortened week. The index has risen 23 of the past 29 sessions, for a total 8.4% gain over the period.
"Should a fiscal deal--even a more modest one--be hammered by next Monday (Dec. 31), we could still see a strong impulse move up," said Ng Weiwen, macro analyst at Phillip Securities, in a note. "Bulls want to charge higher but lack the conviction to do so amid uncertainties over the looming U.S. fiscal cliff."
But Jason Hughes, head of premium client management at IG Markets Singapore, noted "volumes remain quite subdued and you potentially see people realigning their portfolios before the end of the year before taking Monday and Tuesday off and starting afresh in 2013." Volume was scant at 2.19 billion shares valued at only 946.6 million Singapore dollars ($774.1 million). In the broader market, gainers topped losers more than two to one.
Olam climbed 2.3% to S$1.56, coming off an early drop to S$1.485 despite going ex-rights as Singapore state investment company Temasek Holdings continued to increase its holding in the supply-chain manager, with its stake rising to 19% from 18%. Temasek raised its stake to 18% from 16.3% last week. "In our judgment, the company represents a reasonable attractive investment over the long term," Temasek spokesman Stephen Forshaw said by telephone Friday.
Keppel rose 0.4% to S$11.00 after announcing it landed three new contracts valued at a combined S$420 million, bringing year-to-date order wins to S$9.9 billion.
STX Pan Ocean rose 11.4% to S$4.70, despite trading ex-dividend, after Morgan Stanley and Standard Chartered were appointed lead managers for STX group's planned sale of its stake in the bulk shipper. STX Pan Ocean's Korean shares ended up by the 15% daily limit at 4,715 won ($4.40).
UOB ended down 0.3% at S$19.82, well off its early 3.5% drop to S$19.18, the likely driver for the STI's intraday slip into negative territory. Amid low volume, UOB's traded price suddenly made a large drop from one trade to the next at 0356 GMT, with the price moving to S$19.20 from S$19.52, which could suggest a fat-finger error. "We're definitely seeing some strange moves" in the market, IG Markets' Hughes said, citing low volume and end-of-year portfolio moves.
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