Oct 20, 2015

    Local stocks tepid pending Fed rate move

    LOCAL shares kicked off the trading week on a lacklustre note yesterday, with investors content to stay on the sidelines until next week's decision on United States interest rates.

    The benchmark Straits Times Index (STI) dipped 0.2 per cent or 6.11 points to 3,024.50, weighed down by telco Singtel, which slipped five cents or 1.3 per cent to $3.89 on profit-taking.

    IG market strategist Bernard Aw said the STI will likely hover between 3,000 and 3,050 for the rest of the week as investors brace themselves for an interest rate decision by the US Federal Reserve.

    They are also eyeing a possible move in Europe on Thursday to unleash further money-printing, which will in turn boost share markets. Energy penny plays were among the most actively traded here following a rebound in oil prices.

    Loyz Energy skyrocketed 63 per cent or 2.9 cents to 7.5 cents, with nearly 124 million shares traded while Ezra gained 1.6 per cent or 0.2 cents to 13 cents on trade of 64.7 million.

    Other winners included Charisma Energy, up 20 per cent or 0.3 cents to 1.8 cents with nearly 50 million shares traded, and Rex International, which gained nearly 8 per cent or 1.2 cents to 16.3 cents on trade of 42.4 million shares.

    Traders will be keenly watching for any signs of improvement in the Singapore Exchange's securities revenue when the firm releases its first-quarter results tomorrow.

    Keppel Corp, which reports third-quarter earnings on Thursday, will be in the spotlight as well.

    "We are watching to see if Keppel has new business coming in. But the market expects no significant improvement because of the still-weak oil environment," said remisier Chung Chun He.

    Keppel DC Reit units were flat at $1.045 yesterday despite posting a better-than-expected net distributable income of $14.5 million last week. This was 2.2 per cent higher than its initial public offer forecast.

    Noble Group, which continues to show improvement in its ability to access credit, was also flat at 50.5 cents, with 51.6 million shares traded.

    The commodity trader announced yesterday that it has completed a US$1.1 billion revolving credit facility. This was raised from an initial US$450 million, reflecting lenders' support, Noble said.

    "It probably helped that (investment bank) Jefferies issued a 'buy' call on Noble last week, believing that the sell-off has been overdone," Mr Aw said.

    "It remains to be seen whether Noble's credit rating may be downgraded, which will certainly increase its borrowing costs."