Singapore’s Stock Benchmark Hits Record High as Banks Rally

(Bloomberg) -- Singapore’s stock benchmark closed at an all-time high on Wednesday, boosted by the ongoing rally in bank shares.

The Straits Times Index rose 1.5%, pushing the gauge above the previous record level seen in October 2007. Shares of DBS Group Holdings Ltd., Oversea-Chinese Banking Corp. and United Overseas Bank Ltd. hit new highs.

Robust loan growth and local lenders’ ability to buffer any squeeze in profit margins due to lower interest rates have helped drive recent advances in Singapore’s banking stocks. The government’s efforts to revive the island-state’s equity market have also caught investors’ attention.

“There is potential for upgrades as Singapore stands to be a relative beneficiary of the US-China trade war, while also enjoying spill-over effects of Chinese fiscal stimulus,” Maybank Securities Pte analyst Thilan Wickramasinghe wrote in a note. The brokerage has a new target of 4,020 for the index, implying more than 3% upside from current levels.

Still, market watchers have expressed doubt over the outlook for the country’s stock market. Some say the bourse is a shadow of its former self, with delistings outnumbering new listings and prominent regional companies opting to go public elsewhere.

Authorities are looking into the possible removal of outdated rules and ways to encourage a pipeline of quality listings and boost liquidity to strengthen the market. A government task force is set to announce its recommendations later this year.