Feb 02, 2016

    Investors bail out amid China glitch

    ASIAN markets battled through another mixed start to the week, with investors uncertain over the outlook amid further signs of the extent of China's slowdown.

    Shanghai shed 1.78 per cent, Shenzhen dropped 1.04 per cent and Hong Kong lost 0.44 per cent, following news that China's purchasing managers' index slid to a three-year low last month.

    Singapore shares caught the bearish mood and the benchmark Straits Times Index shed 26.7 points or 1.02 per cent to 2,602.41, ignoring the 2.47 per cent rise of the Dow Jones Industrial Average on Friday and snapping a four-day recovery.

    Volume was below average at 976.8 million shares worth $975.4 million changing hands.

    "It seems like people saw the opportunity to sell off and get out. The local mood is still very tentative, and many are still looking to sell to avoid market uncertainties. I don't think we'll see a V-shaped recovery any time soon," remisier Desmond Leong said.

    Twenty components of the 30-stock STI ended on a low note, with Global Logistic Properties the top loser as it tumbled 6.5 cents or 3.85 per cent to close at $1.625.

    GLP is set to announce its third-quarter results on Thursday, and investors will keep a cautious eye on how its Chinese and Japanese logistics portfolio fared in the period amid strong economic headwinds.

    SIA Engineering, another blue chip, announced a 6.7 per cent year-on-year rise in net profit for the quarter ended Dec 31.

    Its shares slid five cents or 1.45 per cent to $3.41 ahead of the announcement.

    Sembcorp Marine pared 5.5 cents or 3.54 per cent to $1.5 while Keppel Corp slid 12 cents or 2.39 per cent to $4.9. The duo are under pressure with the crude oil benchmark Brent at about US$35 per barrel.

    Noble Group also dropped, shedding 0.5 cent or 1.61 per cent to 30.5 cents with 102.5 million shares transacted, making it the most active counter across the market.

    Yangzijiang Shipbuilding led the gainers, putting on six cents or 6.45 per cent to 99 cents. City Developments jumped 23 cents or 3.3 per cent to $7.19.

    "Companies with China-based businesses may be getting a sentiment boost because of expectation of further rate cut by the People's Bank of China in response to the weak factory data," remisier Alvin Yong said.

    Other expectations are also emerging in the market, with some likely relooking the rumour Yanlord Land Group may be getting acquired by CapitaLand to boost its Chinese footprint.

    Yanlord rose five cents or 4.9 per cent to $1.07.

    Meanwhile, the recent move by the Japanese central bank to drop interest rates into negative territory is being regarded with caution, even though it sparked a 1.98 per cent rally at Tokyo yesterday.

    "This move comes out of weakness and also raises the risk that China may retaliate with a further depreciation of its currency.

    "If so, we will have entered a new phase in the currency wars where countries fight over a limited amount of global growth, an outcome which does not bode well for risk assets,'' Schroders chief economist Keith Wade said in a note yesterday.