Neptune Orient Lines Gains Nearly 10 Percent, Singapore Economic Outlook Improves

SINGAPORE -(Dow Jones)- Singapore shares ended higher Friday, led by gains in cyclical stocks as investors’ optimism over the global economy got a shot in the arm from some positive U.S. jobs and retail sales data Thursday.

The 30-member benchmark Straits times Index closed 0.5%, or 14.65 points higher, at 2,993.49. For the week, the index has gained 0.5% and is up 13.1% so far this year.

Analysts say despite the stellar start to the year, Singapore shares remain historically cheap and there’s room for further upside.

Credit Suisse, in a note, said it was upgrading its STI year-end target to 3,400 from 3,038, suggesting potential upside of 13%.

“We do note that even with this 13% upside, price-to-book for Singapore rises from the current 1.49X to 1.68X versus its historical average of 1.75X since 2000,” the house said.

It also noted that there is a fairly good fit between the STI and U.S. jobless claims, and “this relationship also suggests potential upside for the STI towards 3300-3400.”

Volume Friday was lower at 1.31 billion shares, compared with 1.64 billion Thursday. Gainers outnumbered losers 270 to 139.

Most blue-chip stocks ended higher, led by container shipper Neptune Orient Lines Ltd., which rose 5.0% to S$1.465. The stock has surged 9.3% this week, recovering from a selloff in its shares last week after the company posted an unexpectedly severe US$320 million loss for the fourth quarter.

NOL is one of a group of stocks that are considered cyclical plays, in which the company’s earnings are closely correlated to the global economic landscape. Other such stocks also fared well today, reflecting an improvement in sentiment towards the U.S. economy and the debt situation in Europe.

“We believe the global economic cycle has turned up,” said Macquarie Bank in a report. “In short, while markets are likely overbought short term, we do see fundamental fire for the recent rally,” the bank said.

Offshore oil rig builder Sembcorp Marine Ltd. rose 1.3% to S$5.43, while commodities supplier Noble Group Ltd. gained 1.1% to S$1.43 and palm oil producer Golden Agri-Resources Ltd. added 1.4% to S$0.73.

Banks stocks, also considered barometers of economic sentiment, gained across the board. DBS Group Holdings Ltd. rose 0.4% to S$14.23, Oversea-Chinese Banking Corp. Ltd. gained 0.9% to S$9.00 and United Overseas Bank Ltd. added 0.5% to S$18.15.

-By Matthew Allen, Dow Jones Newswires