May 19, 2015

    Energy stocks shine bright in dull market

    INVESTORS chased shares of energy-related firms yesterday, in a market that otherwise largely stayed in bed for an extra day after the weekend.

    The release of Singapore's April data for non-oil domestic exports (Nodx) had some positive news, but economists zoomed in on the negative signs in the monthly reading instead.

    Adding to the weak sentiment was the soft closing of markets in China and Hong Kong which had provided some direction to Singapore stocks in recent weeks.

    The Straits Times Index ended 3.5 points or 0.10 per cent lower at 3,459.60.

    "On the whole, the index is still going sideways," said remisier Chung Chun He. "Some oil and gas counters did well as they were rebounding from falls."

    With oil prices showing an uptick in recent weeks, energy stocks have regained some favour.

    Oil climbed above US$60 a barrel yesterday in Asia, after terror group Islamic State in Iraq and Syria took control of Ramadi, the capital of Iraq's largest province.

    The list of the most actively traded stocks contained oil and gas-services companies like Linc Energy, Jaya, Vallianz and Vard.

    But the FTSE ST Oil and Gas Index failed to close in positive territory, falling 0.72 point to 556.65 as it was pulled down by the sharp fall of mainboard-listed Ezion Holdings.

    Shares of the offshore and marine group fell 5.5 cents or 4.6 per cent to $1.13, its biggest daily fall in two weeks. Ezion is being sued by a partner, which has accused it of a conspiracy to induce an AP Moeller-Maersk unit to breach charter agreements.

    Meanwhile, Singapore exports showed surprise growth last month. The Nodx grew 2.2 per cent over the same month last year, defying the market consensus of a 5 per cent drop.

    But economists pointed out some weaknesses, such as soft electronics exports and manufacturing remaining under pressure by economic uncertainty abroad.

    "Although coming in with positive growth in April, it was really due to the strong growth rates of some of the more lumpy non-electronic segments. The electronics Nodx segment continues to disappoint," said UOB economist Francis Tan.

    UOB is maintaining its Nodx forecast of a 1 per cent contraction for this year.

    The poor earnings reported by the companies that make up the 30 STI component stocks could also spell more humdrum trading in the near term, analysts say.

    Of the 20 companies that have reported first-quarter earnings, only seven boosted earnings per share, The Business Times reported.