Apr 29, 2015

    S-chips hot up as STI dips on mixed day

    SHARES of several China companies listed here - so-called S-chips - caught fire again yesterday in spillover play from the strong China and North Asian markets.

    The main index that tracks the top Chinese companies ended a bit weaker as several previous gainers fell, but others were chased higher.

    The FTSE ST China Top Index, comprising the 20 largest Chinese companies weighted by market capitalisation, was 0.63 per cent weaker at 214.98.

    "Today is a case of profit-taking for the S-chips," said remisier Alvin Yong at OCBC Securities, adding that the cheaper shares would entice others to come in.

    The S-chip action could not prevent the Straits Times Index closing down 20.76 points or 0.59 per cent to 3,495.09, repeating its recent narrow-range trading pattern.

    Volume stood at 1.66 billion valued at $1.25 billion, compared with 1.76 billion worth $1.19 billion on Monday.

    It did not help that major local companies had a mixed day.

    Strong recent earnings reported by DBS and the Singapore Exchange (SGX) drove up their stocks, while Sembcorp Marine fell due to the cloudy outlook for the oil-rig sector.

    DBS rose 10 cents to $20.99 while SGX was up one cent to $8.53.

    Sembcorp Marine, the second-largest global rig builder, reported lower rigbuilding and repair revenue in its first-quarter results on Monday. The stock fell seven cents to $2.94.

    S-chip Yanlord Land fell 3.5 cents or 2.7 per cent to $1.245. It had jumped 23 per cent in the last three sessions to Monday, drawing a query from SGX.

    The real-estate company replied it could not explain the stock's surge.

    SinoConstruction and SIIC Environment, recent favourites of S-chip punters, climbed 13 per cent and 2.2 per cent respectively.

    The Singapore market has paid an on-off homage to the surge in China stocks. But with expectations that the red-hot China play is far from over, S-chips could be expected to trail them higher in coming weeks, traders said.

    The Shanghai Composite Index slid 1.1 per cent yesterday.

    Turnover on the Shanghai and Shenzhen stock exchanges jumped to the second-highest levels ever and a gauge of volatility surged to five-year highs, Bloomberg reported.

    Chief investment strategist Russ Koesterich of asset manager BlackRock wrote in a commentary that hopes for further economic stimulus will continue "to ignite China's equity market".

    He added: "Following a rule change allowing for multiple accounts, mainland stock investors opened 3.25 million new accounts, a record. Also suggesting the growing speculation in the market: Margin debt as a percentage of 'free float' has gone parabolic in recent weeks."