Jan 07, 2014

    China gloom casts shadow on bourses

    TALK of a possible slowdown in China's economic growth sent shares here and across the region down yesterday.

    The benchmark Straits Times Index shed 7.65 points or 0.24 per cent to 3,123.82.

    The index had been on a roll coming into this year but tumbled 43.18 points last Friday to snap a nine-session winning streak.

    "After recent sessions of gains, traders expect some consolidation to set in while rotational plays would still see trading interest," said a note by NetResearch Asia. "Aside from events in overseas markets, the local bourse has been subdued, with confirmation of the turn in property prices."

    The recent blip has come amid a breather on Wall Street and some concerns over China, the world's second-largest economy.

    A private survey yesterday showed slowing growth in the mainland's services sector last month, compared with that in November.

    This added to official gauges last week that indicated sluggish expansion in the manufacturing and services industries.

    The downbeat data hit MSCI's index of Asia-Pacific shares outside Japan, which fell 0.8 per cent to a three-week low.

    Tokyo's Nikkei 225 stock index fell 2.35 per cent, the Hang Seng Index in Hong Kong dropped 0.58 per cent while Shanghai shares were behind by 1.8 per cent.

    Decliners on the STI included Hutchison Port Holdings Trust, down one US cent or 1.48 per cent to 66.5 US cents.

    The business trust holds some ports in Hong Kong and southern China, so its prospects are closely tied to China's economy - and trade volumes.

    Volumes remained weak here, with only $756 million of shares traded. That was weaker than Friday's already-soft $854 million.

    Traders were cheered that the market's recent dip was not accompanied by hefty volumes.

    The most active penny stock was Memstar Technology, which rose half a cent or 4.8 per cent to 11 cents, on 443 million shares traded. The firm was queried last week on the rise in trading volumes but said it was not aware of any unannounced information which may explain the activity.

    Maybank Kim Eng Research said in a note yesterday that Singapore's market valuation "looks modest from both the historical and regional perspectives".

    It expects the STI to hit 3,500 points by the end of this year.

    "We would recommend that investors stay selective, with aviation services, banks, health care and offshore and marine our preferred sectors," it said.