New year fails to bring market cheer
LOCAL shares opened the first full trading week of the new year on a soft note, with weak data from major economies hinting at another uncertain year ahead.
The benchmark Straits Times Index (STI) closed at 3,328.28, down 42.31 points or 1.26 per cent.
It followed a 1.2 per cent drop in the Dow Jones Industrial Average over last week, as United States manufacturing data came in below expectations to stir bearish sentiments.
With regional economies such as Singapore, China and Japan also announcing a set of mixed Purchasing Managers' Indices (PMI) yesterday, the market has little reason to cheer, IG Market strategist Ryan Huang said.
"Businesses are likely holding back new orders, which will have a knock-on impact on sentiments and weigh on regional markets. When you couple that with the profit-taking after the Christmas rally, I am not very optimistic about STI's immediate outlook," he said.
Last month's PMI for Singapore was announced after markets closed yesterday, coming in at 49.6, which indicates contraction. China's PMI fell to a 22-month low last month.
Against this backdrop, most STI component stocks struggled yesterday, with CapitaMall Trust, Ascendas Real Estate Investment Trust (Areit) and Singapore Airlines (SIA) ending the day as the only gainers.
CapitaMall Trust closed at $2.05, up one cent or 0.49 per cent, continuing its overall uptrend since around September last year. SIA gained four cents or 0.35 per cent to $11.59 while Areit rose one cent or 0.42 per cent to $2.41.
SIA's gain came as two of the carrier's overseas ventures - an alliance with Air New Zealand and a joint venture with India's Tata - start services this week.
But SIA's low-cost unit Tiger- air did not fare as well, closing one cent or 3.7 per cent lower at 26 cents.
OCBC Bank Investment Research's Eugene Chua said in a report yesterday: "Bearing in mind that we expect depressed yields in the South-east Asia region to continue this year, we maintain our sell rating."
The resilient banking stocks similarly took a hit yesterday amid economics concerns and profit-taking. United Overseas Bank dropped 55 cents or 2.24 per cent to $23.96 while DBS Bank dipped 46 cents or 2.24 per cent to $20.04. OCBC lost 15 cents or 1.43 per cent to $10.35.
Elsewhere in Asia, Shanghai surged 3.6 per cent to its highest level in five years, as investors continue to bet on the likelihood of government stimulus measures amid its economic slowdown. But Hong Kong did not share the momentum, dropping 0.57 per cent, while Tokyo lost 0.24 per cent.