Jan 27, 2016

    China rout cuts short 2-day rebound

    SINGAPORE shares slid back into the red yesterday, as the nascent recovery on most regional bourses skidded to a halt on a fresh bout of panic in China.

    The benchmark Straits Times Index (STI) slid 37.03 points, or 1.43 per cent, to 2,545.61, capping a two-day rebound.

    In China, mainland stocks tumbled to their lowest level in 13 months - with Shanghai diving 6.4 per cent and Shenzhen plummeting 7.1 per cent - as worries over the country's economic slowdown and capital outflows kept growing.

    Hong Kong sank 2.5 per cent while Tokyo dropped 2.4 per cent.

    The downbeat sentiment across the region mirrored that on Wall Street, which retreated 1.3 per cent overnight as oil prices resumed their downward trajectory.

    Global benchmark Brent slid back below US$30 a barrel, despite turning the corner to climb above US$32 late last week on the back of a cold spell in parts of the northern hemisphere that helped fuel demand.

    "Investors tend to see the decline of oil as a direct indication of slower global growth and weakness in emerging-market economies," Toshihiko Matsuno, chief strategist at SMBC Friend Securities in Tokyo, told Bloomberg. "This is making the overall atmosphere worse."

    The gloom encircling oil prices took a toll on commodity and oil and gas-related plays at home.

    Noble Group, the day's most heavily traded counter with 43.7 million shares changing hands, fell one cent or 3.5 per cent to 27.5 cents.

    Keppel Corporation, which last week announced a drop in earnings and a huge provision for a potential client default, shed 10 cents or 2.1 per cent to $4.71.

    Sembcorp Industries dropped eight cents or 3.5 per cent to $2.23. Sembcorp Marine slipped two cents or 1.3 per cent to $1.475.

    A Bloomberg report last evening, citing anonymous sources, said Temasek Holdings is discussing options for KepCorp and Sembcorp Industries - ranging from selling their non-core assets to selling shares - as both portfolio companies grapple with the oil-price slump.

    All three local banks put up a poor showing.

    OCBC Bank pared eight cents or 1 per cent to $7.69.

    DBS Group Holdings lost 39 cents or 2.8 per cent to $13.76.

    United Overseas Bank lost 53 cents or 2.9 per cent to $17.47.

    The handful of blue-chip winners for the day included real estate counters CapitaLand Mall Trust, which added one cent or 0.5 per cent to $1.975, and City Developments, which inched up three cents or 0.4 per cent to $6.79.

    Corporate earnings were in focus too. SMRT Corporation grew four cents or 2.9 per cent to $1.42, after reporting on Monday a 63.5 per cent surge in net profit to $36.9 million for the third quarter ended Dec 31, while revenue grew 6.6 per cent to $348.5 million.

    Turnover was thin overall, with just 758.4 million units worth $990.8 million being traded.