Jan 15, 2016

    Jakarta blasts twist knife in weak markets

    ASIAN markets slipped back into the red yesterday on the back of slumping oil prices while bomb blasts in Jakarta further strained the already fragile sentiment.

    The attacks in the Indonesian capital sent the Jakarta Composite Index down around 1.4 per cent before shares clawed back some ground to close down 0.53 per cent after the announcement of a 25 basis points interest rate cut.

    The markets were already downbeat after a 2.21 per cent drop on Wall Street overnight, as crude oil benchmark Brent futures languished below US$31 a barrel.

    Singapore's benchmark Straits Times Index dropped 51.93 points or 1.93 per cent to 2,644.57.

    Elsewhere, Tokyo pared 2.68 per cent, Hong Kong lost 0.59 per cent and Sydney was down 1.54 per cent. Shanghai rose 1.97 per cent, reversing its loss in the morning session, but the yuan weakened to remind investors of the bumpy road ahead.

    "Between the lingering concerns over China, the sell-off in the United States and the weak energy prices, regional markets simply cannot catch a break," remisier Alvin Yong said.

    "For STI, we are looking at a support level of 2,600 within this month. Central bank policies - such as further easing in Japan and a limited US rate hike - can catalyse a recovery but, in the short term, the market view is very bearish."

    On the STI, 26 blue chips were down after another torrid day with offshore and marine- related plays belted.

    In what is becoming an alarming slide, both Keppel Corp and Sembcorp Marine suffered big drops.

    Keppel closed down 33 cents or 6.36 per cent to $4.86 while SembMarine dropped 10 cents or 6.8 per cent to $1.37.

    "With the sector in such a bad shape, consolidation is bound to happen. The market has heard rumours that Keppel may be planning to acquire SembMarine, which is not unlikely considering Keppel's previous acquisitions to boost market share," Mr Yong noted, referring to Keppel's move to buy out then-listed Far East Levingston Shipbuilding in the 1970s.

    Other rumours have also emerged amid the market volatility. A trader who did not want to be named told The Straits Times that CapitaLand may be considering a bid for China-focused developer Yanlord Land Group.

    "It makes sense for CapitaLand, which is very bullish on China's property market. Buying Yanlord will expand its market share in the first- and second-tier cities, adding land bank of around 8.4 million sq m," he said.

    CapitaLand dropped three cents or 0.96 per cent to $3.09 and Yanlord shed 0.5 cent or 0.52 per cent to 96.5 cents.

    All three banks were down.

    DBS Bank dropped 45 cents or 2.94 per cent to $14.84.

    OCBC Bank lost 21 cents or 2.55 per cent to $8.03.

    United Overseas Bank slipped 21 cents or 1.16 per cent to $17.83.

    Noble Group dropped two cents or 6.15 per cent to 30.5 cents. The commodity giant maintained its investment grade rating with Fitch, which affirmed it yesterday.

    Among the blue chips, only Singapore Airlines and Sats managed to end the day on a positive note. SIA rose six cents or 0.54 per cent to $11.11.

    Sats put on one cent or 0.26 per cent to $3.87.

    Outside the STI, China Sports International was one of the top active counters, rising 0.2 cent or 9.52 per cent to 2.3 cents. Around 63 million shares were transacted.

    This followed two rounds of share acquisitions by Osim that amounted to around $1.7 million, SGX announcements this week showed.