Feb 04, 2014

    No Chinese New Year cheer for STI

    MOUNTING anxiety over emerging economies and growth concerns over China dragged Singapore's key market index to below the 3,000-point mark and to its lowest point in over a year.

    Wall Street's dip on Friday weakened investor sentiment further on the first trading day of the Chinese New Year.

    The Straits Times Index (STI) shed 36.27 points or 1.2 per cent to 2,990.95, extending last week's losses.

    Elsewhere in the region, the outcome was no different, with Japan's Nikkei 225 taking a beating, losing nearly 2 per cent. South Korea's Kospi lost just over 1 per cent while Australia's ASX 200 closed marginally lower. Markets in Hong Kong, mainland China and Malaysia were shut.

    Several factors are flicking the "risk off mode" switch among investors towards equities.

    One key worry is that the official gauge of China's manufacturing sector fell to a five-month low last month, underscoring a slowdown in factory activity in the world's second-largest economy.

    "We think the growth risk to watch for this year is a downside one, as domestic funding conditions remain structurally tight," said Citi Research in its macro overview of China.

    On the home front, challenges lie ahead. Citi Research does not rule out a sharper-than-expected decline in property prices.

    "Eroding cost competitiveness and supply constraints, especially among small and medium-sized enterprises, could dampen the historically high lift Singapore gets from external demand recovery," it elaborated.

    These factors, plus the rising volatility in emerging markets' currencies and the United States Federal Reserve's tapering, are weighing on investor sentiment, resulting in choppy trading over the near term. For the year, the STI is down 5.6 per cent.

    Turnover was thin, with some 1.49 billion shares worth $873.8 million. Losers pipped gainers 245 to 126, while 415 counters were unchanged.

    Jardine Strategic Holdings led the losses, falling by US$1.18 or 3.6 per cent to $31.32.

    Genting Singapore shed four cents or nearly 3 per cent to $1.34. The company is due to release its quarterly results on Feb 20, which, according to Maybank Kim Eng Research, will likely meet expecations. Even so, it said that consensus is too bullish on the firm's earnings outlook and has a "sell" call on the counter.

    Hongkong Land Holdings fell 16 US cents or nearly 3 per cent to US$5.86. CapitaMalls Asia lost 4.5 cents or 2.6 per cent to $1.715. The fall in these four heavyweights shaved nearly 11 index points off the STI.