May 07, 2015

    Asian shares fall again amid US, China concerns

    ASIAN shares continued their retreat yesterday with sentiment again shaken by a mixture of concerns over the United States economy and regulatory tightening in China.

    Regional markets had braced themselves for a tough day after the US reported that its trade deficit increased 43.1 per cent in March to US$51.4 billion (S$68.2 billion).

    The deficit was the highest since October 2008, pointing to an economic contraction for the US in the first quarter.

    This sparked a further sell-off on Wall Street with the Dow Jones Industrial Average falling 0.79 per cent, adding to the downward pressure coming from China, where worries persist over the tighter margin trading rules put up by securities firms.

    Chinese regulators are clamping down on the leverage-driven stock market speculation that has sent the Shanghai bourse up by around 113 per cent over the past 12 months.

    Shares there fell 1.62 per cent yesterday after the 4 per cent dip on Tuesday, while Hong Kong closed 0.41 per cent down.

    "The (Chinese markets) will enter a correction phase and it will be very volatile. Expensive valuations, euphoric sentiment and slowing liquidity from margin lending will challenge the market in the near term," Bocom International managing director Hao Hong said yesterday.

    With China's manufacturing purchasing manager's index dropping last month to its lowest in a year at 48.9, according to an HSBC survey, there was plenty of external downside pressure for the local market.

    The concerns combined to send the Straits Times Index down 11.4 points or 0.33 per cent to 3,459.79.

    Today and tomorrow will be quiet as investors wait for the US job data to land late tomorrow, Phillip Futures investment analyst Howie Lee said.

    The top gainers among the blue chips yesterday included Sembcorp Marine, which ended eight cents or 2.71 per cent up at $3.03, and Sembcorp Industries, up five cents or 1.12 per cent to $4.50.

    Keppel Corp, another key offshore and energy-related play, ended one cent or 0.11 per cent up at $8.80.

    The three counters rose as Brent oil futures gained overnight to pass US$68 per barrel for the first time this year.

    On the other end of the ledger, Noble Group lost three cents or 3.37 per cent to 86 cents.

    The commodity firm announced on Tuesday a 30 per cent year-on-year drop in first-quarter net profit to US$106.62 million.

    Singapore Airlines ended 29 cents or 2.39 per cent down at $11.85.

    The outlook remains uncertain after its subsidiary Tigerair reported a smaller net loss of $18.8 million for the three months to March 31.

    SIA will announce its results on May 14.

    Elsewhere in Asia, Kuala Lumpur dropped 0.35 per cent but Jakarta gained 0.48 per cent.