Singapore’s Straits Times Index broke out above a key psychological resistance level to rise above 3,200 points for the first time since August 2015.

It closed at 3,211 points yesterday, marking a twenty-month high. The strong rally was backed by strong corporate earnings, especially from the banking and property sectors. 

Singapore’s economy saw a relief rebound in the first quarter of this year, with the crude oil price nearly doubling from the same time a year ago. A strong recovery in global trading has also been reflected in Singapore’s non-oil domestic exports figure over the last few months. The average valuation of Singapore’s blue chips is now around 13.1 times price-to-earnings. 

This ratio is close to its five-year mean and suggests that the market is fairly valued, without considering future adjustments.   

Technically, the Straits Times Index has decisively broken above the 3,200 level, and it will probably challenge the next key resistance level at 3,300 (76.4% Fibonacci retracement) if earnings remain solid for the rest of May. 

Similarly, the Hang Seng Index broke above the key resistance level of 24,580 for the first time in over twenty months, fuelled by optimistic sentiment over China’s stablisation, and ample liquidity moving from north to south via stock links. 

Hong Kong 50 - Cash

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