Jan 21, 2014

    China slowdown hits Asia bourses

    SIGNS of slowing economic growth in China left regional bourses in a sour mood yesterday, with most Asian stock markets ending in the red.

    The local benchmark Straits Times Index was not immune to the gloom, declining 18.54 points, or 0.59 per cent, to 3,128.79.

    Shanghai retreated 0.68 per cent, Hong Kong slipped 0.88 per cent, Tokyo sank 0.59 per cent and Sydney dropped 0.2 per cent.

    China's fourth-quarter real gross domestic product growth slowed slightly to 7.7 per cent year on year from 7.8 per cent the previous quarter, due to weaker exports, manufacturing and investment. Economists have signalled further weakness ahead.

    "Though exports should perform well as the global recovery plays out, the outlook for investment is bleaker than it has been for years," said Schroders emerging-markets economist Craig Botham in a note to clients yesterday.

    "The push to tighten credit and rebalance the economy could be claiming its first victims, though we expect reformers will slow their pace if the body count climbs too high."

    Penny stocks continued to dominate action at home, with Mirach Energy taking the top active spot, rising 3.3 cents to 20 cents on a volume of 505.6 million shares. The firm told the Singapore Exchange in response to a query on Friday that it did not know what caused the sudden jump in its trading activity.

    HanKore Environment Tech was another hotly traded stock, falling half a cent to 11 cents with 194.8 million shares traded. The firm said last week it is in a deal that involves it taking over the environmental assets of China Everbright.

    Osim rose a cent to $2.39 after announcing on Sunday that it had a raised its stake in TWG Tea from 53.7 per cent to 70 per cent in a rights issue.

    Yoma Strategic gained a cent to 75.5 cents. The firm said last week that third-quarter net profit climbed by 42 per cent, but CIMB Research has advised investors to reduce their stakes in the developer.

    CIMB analyst William Tng noted yesterday that the firm's revenue recognition is likely to slow in the fourth quarter.

    Cambridge Industrial Trust slid half a cent to 69.5 cents. It had reported on Friday a 3.8 per cent rise in fourth-quarter distributable income to $15.5 million.

    DMG & Partners Research analyst George Koh maintained his "buy" call on the stock, saying that the trust's growth strategy is well supported by its low debt levels.