Published May 1, 2009

Market cap rises 12.6% to $434.9b in April

But broking firms warn that the rally may be running ahead of fundamentals

By TEH SHI NING

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THE Singapore stock market gained weight in April as 'green shoots' emerged in global economic indicators.

But analysts say that the near-term outlook hinges on the swine flu outbreak.

The combined market capitalisation of the 781 companies listed here rose 12.6 per cent to $434.9 billion at the close of trade yesterday, from $386.2 billion at end-March.

The latest figure is the highest end-of-month market cap since last September's $514.9 billion, when the Lehman Brothers collapse triggered a plunge in international stock markets.

The 20 biggest firms listed here all posted gains in market cap in April, as tentative signs of recovery in global economic indicators led to improvements in stock markets worldwide.

Among the local banks, UOB and OCBC saw their market values fall in March but gained 18.3 per cent and 21.5 per cent respectively in April.

Related link: Click here for the market cap of all SGX-listed companies

DBS advanced 12.4 per cent too, after a marginal lift in March.

Macquarie Research believes 'the recent surge in share prices may have run ahead of fundamentals', as the weaker operating environment is yet to show signs of improvement.

All three banks are due to report first-quarter earnings next week.

Macquarie expects net profits to be lower year on year but higher quarter on quarter.

Property stocks also showed improved market caps in April.

Among them, City Developments rose 27.1 per cent to $5.89 billion, while Wheelock gained 22.2 per cent to $1.31 billion and Keppel Land, 18.6 per cent to $1.24 billion.

Last month, property data releases showed a sharp depreciation in prices across all segments in the first quarter.

'At this point, we are still mid-way through the physical market correction,' DBS Research said this week in a report on the property sector, 'The good thing is that equity prices have moved ahead and are reflecting more-than- trough valuations.'

Of the top 20 listed companies by value, Singapore Exchange posted the biggest rise in market cap last month - up 22.9 per cent to $6.7 billion.

SingTel, which is still the largest company by market cap, gained 1.2 per cent in market value to $40.75 billion.

But rival telcos StarHub and MobileOne saw their market caps fall.

StarHub shed 7.1 per cent to $3.13 billion, while MobileOne lost 1.3 per cent to $1.32 billion.

Still, a recent OCBC report cited the telco sector as one that could benefit if swine flu turns out to be a worldwide headache, saying that such a situation could 'translate into higher demand or usage of IDD services and even broadband services as corporations and consumers shy away from physical travel'.

If the spread of swine flu worsens, stocks expected to be hit include travel-related and retail-related businesses.

But the OCBC report said: 'The extent of the impact may be lessened by the fact that many of these companies have already been sold down sharply due to the economic downturn.

'In fact, current valuations are already relatively close to the valuations seen during the height of the Sars scare.'