Oct 15, 2014

    Europe and US woes send STI sliding

    BARGAIN hunters kept the market in positive territory for a spell yesterday, but caution re-asserted itself and wiped away any gains.

    At one point, the Straits Times Index (STI) hit 3,211.66 points, but caution sent it down 7.75 points or 0.24 per cent to 3,194.40. About 1.22 billion shares worth $890.4 million changed hands.

    The tone was set by a poor opening in Europe and another horror show on Wall Street overnight, where the Dow Jones Industrial Average lost 1.35 per cent while the S&P 500 gave up 1.65 per cent.

    Concerns over global growth and the spread of Ebola after a second person in the United States was diagnosed were behind the declines.

    "It's been a while since we had a gut-shaking correction in the US. It will take a while before the market can build a firmer base. There are a lot of worries about global growth," Nader Naeimi, AMP Capital Investors' head of dynamic asset allocation, told Bloomberg.

    Life-sciences firm OLS Enterprise was the top volume counter here, with 63.2 million shares traded. The stock closed 0.1 cent higher at 1.1 cents.

    The 30 largest companies that make up the STI have endured a difficult month, averaging a 2.6 per cent decline in the first eight sessions, according to a Singapore Exchange (SGX) My Gateway report yesterday.

    It highlighted ComfortDelgro, OCBC, Singapore Airlines (SIA), Singapore Press Holdings (SPH) and StarHub as the most defensive stocks.

    They recorded an average overall gain of 0.1 per cent, although only ComfortDelgro racked up an increase over the period, with a 2.9 per cent rise. The other four stocks dipped between 0.5 and 0.7 per cent.

    ComfortDelgro dropped three cents to $2.44 yesterday, SIA declined 17 cents to $9.61, SPH dipped a cent to $4.16 and StarHub was unchanged at $4.09.

    OCBC fell by nine cents to $9.60, despite Bank of America Merrill Lynch upgrading the stock to a buy from neutral on cheap valuations and an expected improvement in net interest income.

    SPH Reit rose half a cent to $1.065 after announcing a distribution per unit of 1.39 cents, which is 6.1 per cent higher than forecast when the reit was listed.

    CIMB analysts said in a report: "On the back of the soft retail outlook, despite SPH Reit's strong track record of high occupancy, we believe the management may experience some resistance in raising rental rates."

    They kept their hold call on SPH Reit with a target price of $1.09.