Jun 15, 2016

    Jitters lead to 4th straight session in red

    LOCAL shares continued their downward slide yesterday amid market uncertainties around Brexit concerns and central bank meetings.

    The benchmark Straits Times Index (STI) dropped 17.1 points or 0.61 per cent to 2,768.33, ending in the red for the fourth straight session. Only $739.5 million worth of shares were traded, pointing to a slow day with plenty of investors looking on from the sidelines.

    Wall Street fell 0.74 per cent overnight and most of Asia followed suit. Hong Kong shed 0.61 per cent, Tokyo closed down 1 per cent and Sydney tumbled 2.06 per cent. Shanghai, however, managed to put on 0.32 per cent.

    Aside from the Brexit referendum next week, risk-averse investors were also getting out of the market to avoid any unpleasant surprise from the Federal Reserve meeting this morning even though no rate hike is expected after May's disappointing job figures.

    That led to 21 of the 30 STI constituent stocks being sold down yesterday. Singapore Technologies Engineering dropped the most, losing six cents or 1.87 per cent to $3.14. SingTel pared six cents or 1.55 per cent to $3.80 while competitor StarHub closed down three cents or 0.84 per cent to $3.55.

    SingTel dropped despite announcing a tie-up with associate Bharti Airtel to merge their points of presence into one single global network.

    Keppel Corp and Sembcorp Marine remained in the red, with Keppel Corp dropping eight cents or 1.48 per cent to $5.32. SembMarine went down two cents or 1.24 per cent to $1.595.

    Keppel, whose rig-building unit Keppel Fels is close to clinching a US$500 million (S$677 million) deal, may have some respite ahead, DBS said in a note yesterday.

    But it warned that the uncertainties around the supply conditions remain: "Now that oil prices are around US$50 per barrel, the market will start focusing on whether United States shale production sees a resurgence. Watch those numbers closely."

    On the other end of the STI, only five counters rose. These were led by Hutchison Port Holdings Trust, which put on half a US cent or 1.11 per cent to 45.5 US cents.

    But OCBC analyst Deborah Ong warned that Hong Kong port container throughput has dropped 11.1 per cent so far this year, adding: "Given the continued rationalisation as well as muted purchasing managers' index indicators for US and Euro zone, we find it less likely that there will be a strong enough recovery in the Trust's Hong Kong throughput in the second half to end the year flat."

    Yangzijiang Shipbuilding gained half a cent or 0.56 per cent to 89.5 cents while Thai Beverage also rose half a cent or 0.56 per cent, closing at 90.5 cents.

    Outside the STI, embattled commodity firm Noble Group dropped half a cent or 2.08 per cent to 23.5 cents on 72.45 million shares traded - one of yesterday's top actives. Over the past month Noble shares have plunged 26.6 per cent, a drop that intensified following the resignation of chief executive Yusuf Alireza late last month.