Nov 17, 2015

    Reactions to Paris attacks will blow over, say experts

    CONCERN over the Paris terror attacks on the weekend undermined investor sentiment yesterday and sent regional shares falling, although market experts see no reason to panic.

    The dour mood left the benchmark Straits Times Index (STI) down 9.95 points or 0.34 per cent at 2,915.73 after a slow day that saw only 1.19 billion shares worth $855.7 million transacted.

    Investors elsewhere also took their money off the table.

    Hong Kong led the drop, paring 1.72 per cent while Tokyo was down 1.04 per cent, on the day when official data showed that Japan has fallen back into recession.

    Shanghai managed to gain 0.73 per cent with a late hour surge.

    The markets may continue to see some short-term reaction over the incidents in Paris but Barclays senior economist Leong Wai Ho said there is no cause for alarm.

    "There may be some knee-jerk reactions in the regional equities. For instance, people may short airlines, expecting the tightening of border restrictions. But the markets (yesterday) were relatively calm and I don't expect a major impact," he told The Straits Times.

    Bank of Singapore chief economist Richard Jerram agreed: "Judging from past incidents, the economic impact (of terror attacks) tends to low and very much short. I'd be surprised if it lasts through the week.

    "But then again, it's hard to disentangle the impact from the Paris attacks from the already weak tone of the local market, which remains under the pressure of concerns like China's slowdown."

    Against this backdrop, Noble Group was the top active counter yesterday with over 74.7 million shares changing hands. It is also the top active blue chip in turnover for the first 10 months this year, according to Singapore Exchange data yesterday.

    The commodity giant closed down one cent or 2.25 per cent to 43.5 cents, following the 11 per cent fall on Friday as the company announced the third-quarter earnings had plunged 84 per cent.

    Genting Singapore, which also delivered a disappointing 62 per cent drop in third-quarter net profit last week, lost the most among the blue chips yesterday, declining 2.5 cents or 3.21 per cent to 75.5 cents.

    "While we expect a recovery in earnings next year, ... there remains significant earnings risk given headwinds from regional currency volatility and slowing Asian economies," DBS analyst Mervin Song said in a recent note that gave the gaming firm a hold call.

    At the other end of the ledger, Sats gained the most among the blue chips, putting on eight cents or 2.05 per cent to $3.98, while Wilmar International went up five cents or 1.71 per cent to $2.98.

    Outside the STI, film company Spackman Entertainment Group continued to march north, up 1.1 cents or 9.02 per cent to 13.3 cents with 74.1 million shares changing hands.

    Spackman is up about 189 per cent since the start of last month, clearly a hot target for small-cap play.

    The Korean company did have good news to offer as well: Its film The Priests has broken Korea's November box office record, an announcement filed to SGX yesterday said.