May 20, 2016

    Regional stocks spooked by US rate hike fears

    SINGAPORE shares slid further yesterday as concerns over a potential imminent rate hike by the United States Federal Reserve again weighed on investor sentiment.

    The sell-off saw the benchmark Straits Times Index (STI) dropping 37 points or 1.33 per cent to 2,740.11.

    Across the market, some 1.17 billion shares worth $996.1 million changed hands.

    Most key markets in the region also ended in the red. Shanghai edged down 0.02 per cent, Hong Kong slid 0.67 per cent and Sydney pared 0.61 per cent. Tokyo gained a marginal 0.01 per cent, despite Japan's surprise 1.7 per cent growth in the first quarter.

    The tepid performance here followed the 0.02 per cent drop overnight on Wall Street, after the Federal Open Market Committee released its meeting minutes for April.

    "Traders will now keep a keen look-out for US economic data after the latest FOMC minutes suggest a skewed bias for a rate hike in June if data points in the second quarter improve," NetResearch Asia said in a note yesterday.

    The market jitters over rising interest rate are now almost a monthly occurrence, with investors periodically rushing for the exit to avoid potential market volatility that a US rate hike can trigger at a time when other central banks are expected to further ease monetary policy.

    Amid the renewed uncertainties, Thai Beverage dropped the most among the 26 STI constituent stocks that fell. It closed down four cents or 4.47 per cent at 85.5 cents, likely due to profit-taking after its extended gains earlier this week.

    But Thai Beverage is just seeing the beginning of earnings growth from its strategies for both beer and non-alcohol products, CIMB analysts said in a note that marked a buy call for the counter.

    Banking stocks were also belted. DBS Group Holdings shed six cents or 0.4 per cent to $15.01, OCBC dropped three cents or 0.36 per cent to $8.42 while United Overseas Bank sank 22 cents or 1.22 per cent to $17.75.

    Only two STI stocks gained yesterday. ComfortDelGro rose three cents or 1.09 per cent to $2.77 while StarHub put on one cent or 0.29 per cent to $3.47.

    Outside the STI, Noble Group gained half a cent or 1.59 per cent to close at 32 cents. It was one of the top active stocks yesterday, with 54.5 million shares traded.