Singapore shares climbed to two-week highs on Monday and other Southeast Asian stock markets mostly posted small gains, with a surprise interest rate rise in China doing little to dampen optimism about economic growth. Investors bought commodity shares, especially palm plantation firms, and that outweighed weaker demand for other sectors in holiday-thinned trade.
Singapore's Straits Times Index ended up 0.5 percent, Indonesia's main index gained 0.4 percent and Vietnam's Ho Chi Minh Stock Exchange index closed up 0.06 percent, while Malaysia's Kuala Lumpur composite index was flat. Thailand's benchmark SET index, bucking the trend, fell 0.3 percent, reversing its early climb as investors took quick profits in banking stocks, with leader Bangkok Bank 1.4 percent lower.
Bangkok broker KGI Securities said a combination of strong economic growth and political stability would bolster the Thai stock market in the first half of next year, ahead of a general election that could come from the middle of 2011. "While China's interest rate hike is a bit of a surprise, it did not significantly change our equity strategy. We continue to see the Thai market consolidating in the near term and trading on a positive trend in the first quarter of 2011," said KGI's Rakphong Chaisuparakul
"We believe China will be prudent on price levels but not ignore economic growth, and it should continue to be the world's growth engine." The Philippine market, Southeast Asia's best performer so far in December with a gain of 5.4 percent, remained shut on Monday and will resume trade on Tuesday.
Asian shares in general edged up on Monday, with commodity stocks paring early losses as investors bet China's rate rise of 25 basis points on Saturday would not change the relatively optimistic outlook for the global economy in 2011. The MSCI index of Asian stocks outside Japan rose 0.07 percent by 0935 GMT. The Shanghai Composite fell 0.3 percent.
Singapore-based Ng Kian Teck, an investment analyst at SIAS Research, said commodities appealed to investors when prices of other assets like property were high, and they were still below the peak levels seen in 2007. Singaporean palm oil firm Golden Agri-Resources rose 2 percent, Noble Group advanced 1 percent and PT Astra Agro Lestari Tbk, Indonesia's largest listed plantation firm, rose 2.1 percent.
Thai palm oil manufacturer Lam Soon (Thailand) gained 2.9 percent on expectations the government would raise palm oil prices in response to higher global prices, analysts said. Malaysian crude palm oil futures hit a two-week high as hopes of strong Chinese demand and erratic weather helped offset Beijing's rate rise.