Jun 17, 2014

    Football and Iraq make for a flat STI

    THE distractions of the World Cup and the deepening crisis in Iraq that has sent oil prices soaring deterred investors from taking on too many risks yesterday.

    The benchmark Straits Times Index ended flat yesterday, down 2.99 points to 3,290.26 with 1.53 billion shares worth $709.9 million changing hands.

    The top actives were Noble, which shed five cents or 3.46 per cent, to $1.395 while DBS dipped three cents or 0.18 per cent to $17.10 and CapitaLand lost six cents or 1.9 per cent to $3.17.

    "With the World Cup matches exploding in full force in the early morning hours, expect trading activity to be more subdued in the coming weeks. Additionally, the ongoing school vacation period means more market players are away, adding to the lull in activity," noted NetResearch Asia yesterday.

    Oil prices hit nine-month highs on fears that an all-out sectarian conflict in Iraq will disrupt supply routes, in what is the second largest Opec producer, and threaten the fledgling global recovery.

    Football action aside, traders across the region will also be keeping a close watch on the United States Federal Reserve, which meets today and tomorrow.

    Chairman Janet Yellen is expected to answer questions on when interest rates are anticipated to rise.

    Meanwhile, back here, LCD Global jumped 11.3 per cent or three cents to 29.5 cents yesterday, with nearly nine million shares changing hands.

    The hospitality company's run-up is being fuelled by speculation that Aspial chief executive Koh Wee Seng, who had raised his stake to 14.37 per cent as at Thursday, may make a counter-offer for LCD.

    Brothers Raymond and David Lum launched a bid for the firm in April, offering 17 cents a share, which provoked shareholders' outrage over what they called a "ridiculously sharp discount to valuations".

    Mr Koh, who began accumulating LCD shares last month, made his recent acquisitions at prices ranging from 20 cents to 27 cents a share. This has sparked talk that the Lums may be forced to up their offer.

    The Lums control about 32 per cent of LCD shares through their own holdings and those of concert parties. LCD's major shareholder used to be Lum Chang Holdings, also controlled by the Lum brothers.

    LCD is also expected to recognise revenue this year from its integrated project in Xuzhou in China's Jiangsu province, a factor that is also fuelling its share price.

    "This could add 10 to 15 cents to the net asset value of the company, depending on the level of profit recognition," remisier Alvin Yong said.