Singapore shares higher in midmorning trade on Wall St gains

Singapore shares higher in midmorning trade on Wall St gains

	Published : Mon, 27 Aug 2007 03:42 By : Agencies Print this Story

SINGAPORE (Thomson Financial) - Share prices opened Monday higher after Wall Street advanced Friday on better-than-expected sales of new homes in the US in July, helping to ease worries about the problematic subprime market's impact on the US economy.

At 10.15 am, the Straits Times index was up 51.45 points or 1.5 percent at 3,420.90.

Gainers led losers 534 to 100.

There were 580 million shares traded, valued at 540 million Singapore dollars.

CIMB-GK Research said the better-than-expected July home sales and durable goods orders in the US suggest that the US economy is not about to slip into a recession.

Most Asian markets were lower on Friday after the head of Countrywide Financial, the biggest mortgage lender in the US, said the worsening subprime mortgage crisis may cause a recession in the US.

But while the US economy has yet to show signs it is heading to a recession, CIMB-GK said investors will continue to watch closely economic data coming out of the US.

'Given that the subprime worries really only hit global financial markets in late July/August, the impact on the US real sector may only be seen with the release of macro data from August onwards. This week we are going to get several developments that may give investors the chance to gauge the state of the US economy,' CIMB-GK said.

These include the July re-sale home data due later today and the second quarter GDP data due on Thursday.

DBS Group added 30 cents to 20.60 dollars even though Southeast Asia's biggest lender said its exposure to collateralized debt obligations (CDO), which could have exposure to the US subprime mortgage market, is bigger at 2.4 billion Singapore dollars than its initial estimate of 1.3 billion dollars.

CIMB-GK said it is not overly concerned that DBS' CDO exposure is higher than initially thought, because the CDOs are particularly low-risk.

'The low-risk nature of these asset-backed commercial papers suggests that these were underwritten to generate fee income, rather than make incremental spreads. Hence, we believe that the new 1.1 billion dollars of contingent liabilities that DBS is tagged with is not a big a concern,' it said.

Other banks were higher, with United Overseas Bank up 40 cents at 21 dollars, Oversea-Chinese Banking Corp up five cents at 8.70 dollars.

Among blue chips, Singapore Telecommunications was up six cents at 3.70 dollars, Singapore Exchange was up 15 cents at 9.60 dollars, COSCO Singapore was up 10 cents at 5.10 dollars and Keppel Corp up 20 cents at 12.80 dollars.

Property stocks were also higher, with CapitaLand up 15 cents at 7.50 dollars, City Developments up 40 cents at 15.40 and Keppel Land up 10 cents at 8.10 dollars.

(1 US dollar = 1.51 Singapore dollars)

TFN.Singapore@thomson.com

jb/jg

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