Mar 09, 2016

    China's poor exports trigger profit-taking

    SINGAPORE shares sank yesterday as a worse-than-expected export performance by China gave traders the excuse to book their profits.

    China's February exports posted their biggest drop in more than five years, reinforcing fears that the world's second-largest economy is slowing.

    Imports for the month also slowed, signalling more difficulties ahead for its trading partners.

    The Straits Times Index slid 1.58 per cent or 44.74 points to hit 2,778.77. Profit-taking on blue-chip constituent Keppel Corp, which plunged nearly 7 per cent or 43 cents to $5.77, did the most damage.

    Other blue chips also took a hit. DBS Group lost 1.7 per cent or 26 cents to $15.12, OCBC dipped 0.9 per cent or eight cents to $8.64, Sembcorp Industries plunged 9.1 per cent or 29 cents to $2.90, UOB slipped 1.1 per cent or 21 cents to $18.17, and Singtel dropped 0.8 per cent or three cents to $3.72.

    Market participants are looking ahead to the European Central Bank's meeting tomorrow with expectations for further cuts to its already negative deposit rates and more quantitative easing beyond its proposed end in March 2017.

    "The market needs more good news for the rally to sustain. But now that we have broken support at 2,800, the next support level will be 2,730," remisier Alvin Yong said.

    Meanwhile, oil and gas plays continued to hog the most actively traded list.

    Ezra Holdings slipped 2.9 per cent or 0.3 cent to 10 cents with 617.5 million shares traded.

    Nam Cheong fell 4.4 per cent or 0.5 cent to 10.8 cents on trade of 85.4 million and Magnus Energy was flat at 0.4 cent with 114.6 million shares changing hands.

    Commodities trader Noble Group was flat at 45 cents with 127.8 million shares traded.

    Interra Resources continued to rebound for a second session despite being queried by the Singapore Exchange over unusual volume movements on Monday.

    The petroleum exploration and production company surged 17.2 per cent or 1.5 cents to 10.2 cents, with 57.1 million shares traded.

    Osim International, which resumed trading yesterday, surged 12 per cent or 15 cents to $1.375. Its founder has made an offer to take the company private.

    DBS Group Research said several large shareholders, mainly institutional funds, can collectively hold out to get a higher price.

    "Although we are now less pessimistic on earnings visibility, the sales decline has been less severe in the fourth quarter, but it is still shrinking in absolute terms.

    "More than 50 per cent of Osim's sales are from massage products and these could likely be the drag on sales growth," it added.

    Meanwhile, of the 20 STI component stocks under RHB Research's coverage, most reported fourth quarter earnings in line with expectations.

    "Recent risk appetite appears to have improved, spurred by the optimism of further easing in China and a strengthening Singdollar, while oil prices (appear) to stabilise, helping to generate trading opportunities," it said.