Singapore shares likely to end on positive note, helped by gains across Asian markets, firmer US stock futures, according to Dow Jones.

STI’s upside, however, likely limited given weakness in property stocks, with CityDev (C09.SG) off 3.3% at $11.56, CapitaLand (C31.SG) off 1.5% at $3.94 in response to new government measures to cool housing market. Index +0.5% at 2,954.73, likely to face resistance at 2,969 (Aug 11 high).

While uncertainties over global economic health remain, DBS Vickers says downside for STI in near term likely limited.

“We believe that the local bourse is well prepared for growth moderation in 2H...This is because the year-to-date flat performance in the STI showed that investors had spent the past eight months worrying about uncertainties and ignored 1H growth,” says the research house.

Overall market volume remains modest. Notable gainers among STI components include Genting Singapore (G13.SG), +3.1% at $1.65, Olam (O32.SG), +2.2% at $2.74, SingTel (Z74.SG), +1.3% at $3.04.

Gains across Asian bourses keeping sentiment in Singapore market generally buoyant, although property stocks buck advance on additional government measures to rein in housing market, says Dow Jones.

STI +0.6% at 2,956.87 midday, with immediate resistance at 2,969 (Aug. 11 high). “The risk environment seems to be indicating a sharp turnaround from risk aversion to appetite after Ben Bernanke’s statement on Friday,” says Phillip Securities; “we could see a shift in the short-term trend” if STI ends above 2,955 mark (last closed above this level on Aug 10). 

Market breadth at 2 gainers for every decliner. Overall market volume modest at 758.4 million shares worth $600.5 million, with Genting Singapore (G13.SG) most active, +2.5% at $1.64, followed by penny stocks Equation (532.SG), +8.3% at $0.065, United Fiber Systems (P30.SG), flat at $0.05, Style Merchants (N37.SG), flat at $0.05. FTSE ST Real Estate Holding & Development Index down 1.1%. 

Singapore increased down payments for second mortgages and imposed a stamp duty on property held for less than three years to curb speculation after home prices surged 38% in the second quarter.

Buyers who hold more than one mortgage can only borrow up to 70% of a property’s value, versus 80% previously, and pay 10% in cash, up from 5%, the government said in a statement today. A seller’s stamp duty will apply to all residential units and land sold within three years of purchase, from one year. The changes are effective today.

Singapore joins Hong Kong and China in introducing measures this year to cool their property markets amid concerns that asset bubbles are taking root as home prices surge. Hong Kong said this month it will tighten mortgage lending rules and increase the supply of land, while China’s restrictions include higher down payments and mortgage rates for multiple-home buyers.

“The government is taking a preemptive approach to make sure prices don’t get out of hand,” said Donald Han, a Singapore-based managing director at real estate adviser Cushman & Wakefield Inc. “Most of the measures are really targeting repeat buyers and speculators who buy and sell over the short term, which is now defined as within three years.”

CapitaLand, Southeast Asia’s biggest developer, dropped 1% to $3.96 as of 10:01 a.m. in Singapore trading, while the benchmark Straits Times Index rose 0.7%. City Developments Ltd., the island’s second-largest developer by market value, fell 3.2% to $11.58, headed for its biggest decline since February.

Previous Measures
Prices property have surged as Singapore’s $246 billion economy rebounded from last year’s global slump to expand at a record 17.9% pace in the six months through June.

The city-state has been attempting to rein in home prices since last year when the government barred interest-only loans for some housing projects and stopped allowing developers to absorb interest payments for apartments still being built.

The government in February said it will levy a seller’s stamp duty on all residential properties and land that are sold within one year from the date of purchase. The city-state then also lowered the loan-to-value limit to 80% from 90% for all housing loans provided by financial institutions regulated by the Monetary Authority of Singapore.

The city-state’s Prime Minister Lee Hsien Loong yesterday said previous measures failed to keep prices from rising.

“We twice attempted to cool the property market, once last year and once in February this year, but the prices are still rising,” Lee said in a televised speech. “Our purpose is to make sure in the long term, Singaporeans can own their homes and afford it and it will be a gradually appreciating asset which will grow as Singapore grows.”

Threat of Bubble
Singapore’s property market would form a bubble if the current momentum continued, Mah Bow Tan, Minister of National Development, said in Singapore today after the measures.

“The property market is currently very buoyant,” the Singapore government said in the latest statement. “The government’s objective is to ensure a stable and sustainable property market where prices move in line with economic fundamentals.”

Singapore private residential prices rose 38% in the second quarter from a year earlier, according to the Urban Redevelopment Authority.

The island led 36 markets around the world in property- value changes last quarter, gaining 34% from a year earlier, according to the Global Property Guide in its survey of house prices.

Price levels have exceeded the historical peak in the second quarter of 1996, the government said today.

Surging Economy
The government expects gross domestic product to grow 13% to 15% this year after the nation in 2009 exited its worst recession since independence 45 years ago.

“Should economic growth falter and the market corrects, property buyers could face capital losses, with implications on their own finances and the economy as a whole,” the government said. “Moreover, the current low global interest rate environment will not continue indefinitely, and higher interest rates could have severe implications for buyers who have overextended themselves.”

Hong Kong, China
Hong Kong Aug 13 raised down payments for apartments costing HK$12 million ($2.09 million) or more to 40%, from 30%. The government has been accelerating its auctions of land for development in a bid to cool prices that have soared about 45% since the beginning of 2009, boosted by mortgage rates at the lowest in two decades and buying by mainland Chinese.

John Tsang, Hong Kong’s financial secretary, said home prices are approaching the level of 1997, the height of a previous bubble that was followed by a six-year slump.

In China, the banking regulator has ordered stress tests for lenders to gauge the impact of home prices falling as much as 60% in the hardest-hit markets, a person with knowledge of the matter said. China’s property prices rose at the slowest pace in six months in July as the government cracked down on speculation to prevent asset bubbles.

China has restricted pre-sales by developers, curbed loans for third-home purchases, raised minimum mortgage rates and tightened down-payment requirements for multiple-home purchases. It has also instructed lenders to halt third-home loans in areas with “excessive price gains.”

Malaysia’s central bank has written to financial institutions to get their feedback on the possibility of capping the loan-to-value ratio for mortgages at 80%, The Edge weekly reported Aug 28, citing unidentified people familiar with the matter.