Dec 16, 2014

    Oil and gas plays sink further as STI dips

    LOCAL shares closed lower amid a regional slump, as downbeat sentiment persisted after Wall Street suffered its biggest weekly loss since September 2011.

    The benchmark Straits Times Index (STI) slipped 29.99 points or 0.9 per cent to close at 3,294.14, after a late rally pulled the index up from an intra-day low of 3,285.49.

    Trading volumes were equally poor, with only 994.8 million shares worth $881.1 million changing hands, well under the average of $1.091 billion last week.

    Wall Street set the mood, falling 3.8 per cent last week.

    Oil and gas plays here were again hit by more volatility after Brent futures briefly dropped to just above US$60 a barrel before rallying to around US$63.

    That sent Ezion down 1.5 cents at $1.045 while Sembcorp Marine lost two cents to $2.87.

    Keppel Corp opened 15 cents down in the morning before recovering to close 10 cents down at $8 - a new low since the market crash in late 2011.

    IG Markets strategist Ryan Huang noted that while the energy sector's overall drop was not as severe as expected yesterday, there was little reason to be optimistic.

    "Investors saw some support for oil prices for now, and some may be going in for bargain hunting. But this will only be temporary - the fundamentals haven't changed and there's no real support (for oil prices)," he said.

    Furthermore, a major dip - similar to one that sent the STI as low as 3,154.21 in mid-October - cannot be ruled out before the end of this year, Mr Huang cautioned.

    "Just this past week alone, we have seen a lot of uncertainties and jitters being reflected in the market, which just needs a spark from any economic indicator to prompt a sell-off. I'd argue that a progression of pullback before year end is not entirely unlikely," he added.

    The once-resilient banking stocks have also been hit by worries over the uncertain economic outlook. DBS Bank closed 32 cents down at $19.78, OCBC Bank dipped three cents to $10.43 and United Overseas Bank tumbled 26 cents to $24.09.

    Despite the bearish mood, some plays have managed to eke out gains. The top gainers yesterday included Ascendas Reit, which rose three cents to $2.35, Hongkong Land added three cents, ending at US$6.83 (S$8.87), while CapitaMall Trust gained two cents to $2.03.

    Most regional markets fell: Tokyo dropped 1.57 per cent as the Nikkei failed to draw momentum from Prime Minister Shinzo Abe's election victory over the weekend. Kuala Lumpur dropped 1.8 per cent while Hong Kong dipped 0.95 per cent. Shanghai was the only major market that gained, closing 0.52 per cent higher.