Singapore shares could trade higher after an encouraging showing on the first day of the year, dealers said. "It's a good start to the year. It looks increasingly likely we'll see a bit of a rally in January," said a trader at a local brokerage.
The sentiment came despite the government's announcement Friday that the city-state's economy, which is in recession, could contract by as much as two percent this year.
"There's a convergence of events later this month, namely (US president-elect Barack) Obama taking over and the Singapore budget, which could send the market higher in the first few weeks of the year," a trader said. Obama plans to spend up to 775 billion dollars on an economic stimulus package, his top aides said recently, while Singapore unveils on January 22 a budget the government says will be expansionary.
The main Straits Times Index closed Friday at 1,799.72, up 74.11 points or 4.29 percent from the previous week, which was shortened by the Christmas holiday that reduced trading volumes. The past week was also truncated, by the New Year's break, but a full five days of trading return next week. Average volume was 633 million shares worth 523 million dollars (360 million US), compared with 493 million shares worth 433 million dollars the week before.