Sep 29, 2015

    Heavyweights drag STI into the red

    THE Straits Times Index (STI) yesterday kicked off the week on a distinctly poor note.

    It dropped 40.72 points or 1.4 per cent to 2,791.92, its lowest close since June 2012.

    The slide was led by falls in Singtel, the banks and several other index heavyweights, prompting speculation that it was selling by large funds ahead of the end of the third quarter tomorrow.

    Turnover done in index components amounted to $703.2 million, which in dollar terms was 73 per cent of the entire market's business of 950 million units worth $965.3 million.

    With the index displaying such weakness, it came as no surprise that the advance-decline score was 108-295, excluding warrants.

    Singtel's 12-cent or 3.3 per cent fall to $3.52 came with 63.2 million done and cut 11 points off the STI.

    Among the banks, DBS Bank ended 19 cents weaker at $16.58 on volume of 4 million.

    Macquarie Warrants in its daily newsletter said the stock is Macquarie Equities Research's top sector pick with an "outperform" and $20 target.

    "Macquarie Equities Research believes the key reasons to buy DBS are good earnings momentum in a relative context; relative beneficiary of higher rates given the strong Singapore dollar liquidity position; potential to lift dividend payout ratios; and potential to shift the strategic focus towards cost efficiency if growth opportunities continue to disappear," said Macquarie Warrants.

    Other South-east Asian stock markets closed weaker yesterday ahead of key economic data this week while concerns about a possible United States interest rate hike this year weighed on sentiment.

    Cautious investors waited for clues from Japan's industrial production data, scheduled for tomorrow; China Caixin Purchasing Managers' Index on Thursday and US non-farm payrolls on Friday.

    Jakarta's composite index, the region's worst performer so far this year, closed down 2.1 per cent at its lowest since Sept 6, 2012.

    Shares in Thailand and the Philippines fell more than 1 per cent each.

    Vietnam shares ended nearly 1 per cent lower, their biggest fall since Sept 3, after the central bank removed a 0.25 per cent interest rate ceiling on corporate dollar deposits.