Wednesday, June 6, 2012

Shares rise at midday; Olam up

Singapore’s main index rose by midday, led by gains in commodity trader Olam International, on hopes that policymakers will unveil fresh stimulus measures to counter the global slowdown and as data showed the US services sector improved last month.

The benchmark Straits Times Index gained 1.05% to 2,740.67 points. Olam was the top gainer in the index, rising 3.2% to $1.60. Morgan Stanley said that Olam’s stock price correction, which saw its shares plunge about 30% since the start of May, was overdone.

“We remain overweight, as we find valuation attractive and the food business solid,” said Morgan Stanley in a report.

Although it cut its target price for Olam to $2.50 from $3.40, saying its non-food businesses would be a drag on its earnings this year, the broker said the outlook for 2013 will be better, driven by growth in the food business.

However, gains in the STI may be limited as investors remained cautious ahead of the European Central Bank’s monthly rate-setting meeting later on Wednesday.

“Investors are waiting for more details on whether there will be another round of quantitative easing, and ahead of the ECB meeting. The attention is still on Europe, and pending other economic data from the US,” said Ng Kian Teck, lead ananlyst at SIAS Research.

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