Singapore's key share index broke above the 2,000-point threshold on Wednesday to a 45-month high, but analysts said prospects of more gains were clouded by doubts over pace of economic growth at home and abroad.
The benchmark Straits Times Index finished up 0.49 percent, or 9.86 points, at 2,003.99, its best since December 13, 2000. In the broader market, losers led gainers 159 to 143 in heavy turnover of 667 million shares.
Four quarters of double digit economic growth and healthy dividend payouts has made the Singapore stock market among Asia's best performing this year with a 13.15 percent rise so far, just behind Manila's 18.3 percent and Jakarta's 17.7 percent.
Kevin Scully, who heads independent Netresearch Asia, calculated that the market at a price-to-earning ratio of 13 times for 2004 would still be some 20 percent undervalued even if a 50 basis point rise in interest rates is factored in.
"So on a relative basis Asian markets like Singapore are still quite cheap and should do well," he said. According to Reuters Estimates, the Singapore index is trading at a price-to-earnings ratio of 12.65 times and is forecast to trade at a multiple of 13.85 by the year-end, compared with a forecast of 14.5 times for Hong Kong and 6.6 times for South Korea.
But many analysts believe investors would price in a possible moderation of growth in the city-state's export-driven $95 billion economy amid slowing demand from its major markets such as the United States and China.
Top gainers on Wednesday included Singapore Telecommunications that rose 1.7 percent to a four-month high of S$2.42. SingTel announced after trading hours that it had sold its entire 28.51 percent stake in MediaCorp Press Ltd for S$13.7 million.
Singapore Airlines (SIA), rose 2.6 percent to a six-month high of S$11.80 and OCBC Bank rose 1.4 percent to S$14.20, its highest since February 2000.
Dealers said Singapore Airlines rose on news that it would outsource some of its IT jobs this year to cut costs. In another cost cutting move, European plane marker Airbus said SIA has signed up for its customised spares logistics services. OCBC rose after it announced that it would sell a retail property, Whitesands Shopping Mall, for S$161 million.
Shares of takeover target Neptune Orient Lines Ltd (NOL) briefly traded at a six-week low of S$2.79 but ended steady at S$2.80 after NOL enforced a trading halt.
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