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CityDev shares gain as interest rates expected to stabilise

Property Guru – Tue, Aug 2, 2011

City Developments (CityDev) shares surged by as much as 2.8 percent on 1 August, fuelled by hopes that interest rates will stabilise in the months after US policy-makers agreed to a deal to cordon off a default, traders said.

The property developer's shares were sold at S$10.85, with associate property developer Hongkong Land's shares rising slightly by 2.8 percent to US$6.91 and CapitaLand's shares climbing 1.4 percent at S$2.94, with 11 million shares traded.

"Previously, there were worries US interest rates could spike if it defaulted, which would be negative for property developers. Now that the US has struck a deal, investors are more confident that interest rates would remain stable at least in the near term," commented a local trader.

US President Barack Obama said on 1 August that the leaders of both parties had agreed to slash the budget deficit by US$1 trillion over the next decade, with a further US$1.4 trillion in savings possible.

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