May 14, 2015

    Forecast for El Nino's return fuels plantation stock trading

    SINGAPORE shares recovered some ground yesterday as bargain hunters shrugged off concerns over a global bond sell-off.

    A report declaring an imminent return of the El Nino weather phenomenon fuelled heavy trading in plantation stocks.

    The benchmark Straits Times Index closed 10.84 points higher at 3,453.17, with 1.3 billion shares worth $930.6 million changing hands.

    Singtel gained nearly 1 per cent, or four cents, to $4.36, with 18.9 million shares traded, while Global Logistic Properties jumped 1.5 per cent, or four cents, to $2.71, with 16 million shares traded. Shares of Singapore Exchange gained 0.3 per cent, or three cents, to $8.69, with 4.9 million shares traded.

    According to Australia's Bureau of Meteorology, the tropical Pacific is in the early stages of El Nino, which typically brings below-average rainfall and could hamper crude palm oil production in the region.

    Among the most actively traded stocks were Golden Agri-Resources, which closed flat at 44 cents, with 47.5 million shares traded; and Wilmar International, which jumped 0.6 per cent, or two cents, to $3.25, with 13.3 million shares done. First Resources rose 0.8 per cent, or 1.5 cents, to $1.96.

    Maybank Kim Eng maintained a neutral call on the plantation sector, but said "Indonesia and Singapore stocks still provide good trading opportunities after recent price corrections".

    "In the coming months, we expect palm oil export figures to pick up as end buyers like China, with its low inventory level, may take a defensive strategy to stock up on fear of a possible supply crunch," the brokerage said.

    SIA Engineering slipped 4 per cent, or 17 cents, to $4.08, after reporting weaker-than-expected earnings. The company's net profit fell 36.5 per cent year on year to $41.4 million for the fourth quarter, in line with lower revenue.

    Elsewhere in Asia, China's Shanghai Composite Index slid 0.6 per cent after some economic indicators came in just shy of expectations. Industrial output increased 5.9 per cent last month from a year earlier, but missed forecasts for 6 per cent.

    Retail sales grew 10 per cent on-year, missing estimates at 10.4 per cent. Year-to-date fixed asset investment - which includes spending on infrastructure, factory equipment and property construction - rose 12 per cent, a new 14-year low.

    Hong Kong fell 0.6 per cent, while the Hang Seng China Enterprises Index of mainland stocks traded in the city lost 0.8 per cent.

    Japan jumped 0.7 per cent as data from the Ministry of Finance showed the country logging its highest current account surplus in seven years.