The rise in Singapore shares which saw market value double during the year to half a trillion Singapore dollars is likely to continue into 2000.
According to analysts the outlook is bright for stocks next year, the year of the Dragon, an auspicious sign in the Chinese zodiac which officially begins after the lunar new year in early February.
While trading might slow amid year-end festivities this year, analysts and fund managers noted it would be an opportune time to stock up the larder given the pro-equities climate now.
"I think 3,000 for the Straits Times Index (STI) next year will not be difficult to achieve. We are seeing 2,700-2,800 by the first quarter," said research chief of Kim Eng Securities Mr Seah Hiang Hong. On Christmas Eve, the key STI ended at yet another record high of 2,446.57, up almost one per cent from Thursday and more than 3 per cent from a week earlier.
Contrary to the typical seasonal year-end lull, volumes were healthy as retail investors built up their portfolios ahead of the anticipated post-holiday rush when the big boys resume play. While most of the good news, including a more stable regional political scene and benign interest rates had been priced into the shares, analysts said the upward bias was intact.
"Merrill Lynch is optimistic about the state of the global economy and the electronics cycle," its research head Mr Tan Sim Mui said. "Both of these bode well for domestic confidence. Against this backdrop, we see limited downside to asset prices," he said.
Underpinning the equities market would be strong retail liquidity and corporate efforts to boost shareholders' value.
Banks and electronic contract manufacturers like NatSteel Electronics remain favourite buys.
"We have a buy on OCBC and Overseas Union Bank on the back of their potential merger," Mr Seah said.
If the merger does takes place, some analysts said OCBC could head towards S$19 ($11) a share. OCBC ended last week at S$14.80 while OUB was at S$9.20.
Government-linked DBS Group, though a favourite among funds given its dominant role in the city-state and recent regional expansion, was seen to be overvalued but some analysts' fair value targets were at S$30 a share. DBS rose 90 cents to end at S$27.90 on Friday.
National carrier Singapore Airlines, which ended at S$18.90, was also among the hot picks especially after it bought a 49 percent stake in Britain's Virgin Atlantic Airways.
"We have revised our earnings estimate for SIA. It is an outperform and a fair value price of about S$20," an analyst with a local bank said. In contrast, property stocks remained under a dark cloud, analysts said.
"With residential property asset prices having substantially recovered and the government's commitment to ensure adequate supply, coupled with a massive deluge of supply from en-bloc development, we are concerned that asset prices could soften substantially, casting a pall on the equity market," Mr Tan said.
