Jul 22, 2014

    Rising Middle East tensions scare traders

    RISING geopolitical tensions in the Middle East have unnerved investors to the point that turnover plunged yesterday to its lowest level since Boxing Day last year.

    Only 1.53 billion shares worth $622.2 million changed hands on an anaemic day of trading that left the benchmark Straits Times Index up just 3.74 points to 3,314.27.

    Trading volumes have not been that low since Boxing Day, when only $601.5 million worth of shares changed hands, but the excuse then was that many investors were still on holiday.

    The top active stocks included DBS, up five cents to $17.48, UOB, up 11 cents to $23.76, and CapitaLand, up three cents to $3.29.

    Among the laggards was E2-Capital Holdings, which plunged nearly 50 per cent or 7.4 cents to 7.5 cents on volume of 115,000 shares, after the stock went ex-entitlement yesterday.

    That means those who bought shares yesterday would not be entitled to a proposed cash distribution.

    The company in April proposed a capital reduction exercise to distribute cash to its shareholders, following the sale of its unit, Wealthy Aim Investments, for HK$471.6 million (S$75.5 million). It wants to issue a cash distribution of 67 Hong Kong cents for each share, amounting to a distribution of HK$187.6 million.

    Meanwhile, traders are eyeing the mainboard trading debut of First Sponsor Group today. "If it does well at debut, it would be a vote of confidence for the China market," remisier Alvin Yong said.

    First Sponsor Group, owned by Hong Leong Group Singapore and Tai Tak Estates, develops and owns residential and commercial property in China.

    It also provides property financing services, with a focus on Shanghai. In total, First Sponsor Group will issue 34 million shares priced at $1.50 apiece to raise $59.7 million.

    Achieva jumped 3.33 per cent or 0.2 cent to 6.2 cents, on speculation that it could be a reverse takeover target, after the board said it would be divesting the entire share capital of a unit, Achieva Technology, to Serial System, a listed electronics firm.

    Achieva, an IT and computer parts distributor, said the proposed transaction "may result in its assets consisting wholly or substantially of cash or short-dated securities".