Sep 16, 2015

    Falling STI, timid investors

    LOCAL shares stayed in the red in another tepid session as investors stayed mostly on the sidelines to avoid uncertainty piling up on both the domestic and foreign fronts.

    The benchmark Straits Times Index (STI) dropped another 29.53 points or 1.03 per cent to 2,841.94 yesterday, in a poorer outing than Monday's 0.6 per cent loss.

    Across the whole market, about 1.32 billion shares worth $1.42 billion changed hands yesterday, but the unusual strong volume resulted from a married deal at Olam International, the most active counter yesterday with some 222 million shares transacted.

    The vast bulk of the Olam shares traded, more than 221 million, related to Mitsubishi Corporation's agreement to buy these shares from Olam's founding member Kewalram Chanrai Group at $2.75 apiece, as part of its deal to partner with the commodity company. Olam gained 1.5 cents or 0.76 per cent to $2.

    Otherwise, the market was largely quiet, remisier Alvin Yong said.

    "I see some portfolio rebalancing, with some people bargain hunting among the small and mid-caps while many others took their money off the table," he said.

    "The Fed rate hike is still on investors' minds. I believe there's a good chance that it will be announced this week, and if so we will see the market trading sideways with a bearish bias for at least the near term."

    Of the 30 STI blue chips, 22 closed lower, with Noble Group the weakest of the bunch, sinking 1.5 cents or 3.16 per cent to close at 46 cents.

    City Developments fell 20 cents or 2.44 per cent to close at $7.98. Shares of the property group, which have been under pressure since April, were hammered again yesterday following news that Metro will close its outlet at its City Square Mall by the end of this year.

    The banking stocks also struggled, with DBS Group Holdings paring 13 cents or 0.74 per cent to close at $17.49. OCBC dropped seven cents or 0.78 per cent to $8.92, while United Overseas Bank closed 18 cents or 0.92 per cent lower at $19.30.

    Stocks of the trio have yet to benefit from the hiking of the Singapore Interbank Offered Rate, currently sitting around seven-year highs.

    "This should improve the banks' margins going forward, but banking is a proxy of economy, and Singapore's outlook is not looking good with economists downgrading their forecasts left and right,'' Mr Yong said.

    At the other end of the ledger, SIA Engineering was the top gaining blue chip, adding eight cents or 2.24 per cent to close at $3.65.

    Genting Singapore put on one cent or 1.39 per cent to 73 cents. But the company is not out of the woods yet, as the depreciation of regional currencies against the Singapore dollar will likely erode its earnings, warned Union Gaming Securities Asia last week.

    Overseas markets were a mixed picture. Kuala Lumpur rose another 0.46 per cent as the cheery mood over the government's freshly announced stimulus measures continued. Tokyo also gained on good news, up 0.34 per cent after the central bank pledged to maintain its stimulus measures.

    In China, however, sentiment was markedly more downbeat amid persistent signs of economic slowdown there. Shanghai tumbled 3.52 per cent and Hong Kong pared 0.49 per cent.