Jun 05, 2014

    Some bright spots even as STI retreats

    SINGAPORE shares continued their southward sojourn yesterday, as investors awaited key market-moving events in Europe and the United States.

    After inching five points lower on Tuesday, the benchmark Straits Times Index (STI) fell 16.5 points, or 0.5 per cent, to 3,280.17 yesterday.

    Volumes were fairly buoyant, with some 1.8 billion shares worth $1.1 billion changing hands.

    "We had expected June to be quite quiet because of the school holidays and the World Cup, but so far it's been encouraging. There's keen interest in selected stocks," said a broker.

    One of the hot stocks yesterday was takeover target Stats ChipPAC, which rocketed 25 per cent, or 12.5 cents, to 61.5 cents with 57 million units done. The surge, which took the counter to a three-year high, triggered a query from the Singapore Exchange.

    The semiconductor assembly and testing specialist has seen its share price shoot up since the middle of last month, when it was considering an offer for all of its shares by an unnamed party.

    But the overall regional mood was still one of caution as investors awaited two main market events.

    "The lack of conviction is leading to a period of consolidation ahead of risk events such as the European Central Bank meeting on Thursday and non-farm payrolls on Friday," said CMC Markets analyst Desmond Chua.

    That set the scene for a mainly downbeat mood in the region, with Hong Kong dropping 0.6 per cent, Shanghai shedding 0.66 per cent and Australia dipping 0.64 per cent.

    Here, 13 of the 30 STI component stocks closed lower, with the same number of gainers and four unchanged.

    Blue chips ended mixed, with those such as Jardine Matheson, Jardine Strategic and United Overseas Bank closing lower, but others - such as DBS Group Holdings, OCBC Bank and ST Engineering - finishing higher.

    Property plays were down, with CapitaLand a cent back at $3.19, City Developments 12 cents behind at $10.23 and Hongkong Land 17 US cents (21 Singapore cents) lower at US$6.83.

    In contrast, Jardine Cycle & Carriage gained 18 cents to $43.80 after DBS Vickers initiated coverage on the counter, with a buy call and target price of $49.88.

    DBS Group Research analyst Paul Yong noted that the stock is a "near 100 per cent proxy for Astra International, with exposure to South-east Asia's automotive market", and is likely to see "firm double-digit earnings growth next year and in 2016, driven by contribution from Astra".

    The day's most active stock was again W Corporation, which jumped 0.9 cent to 8.1 cents with 176.3 million units traded.

    The trader of silicon-based materials and light-emitting diode components said it has received in-principle approval from the exchange for its proposed $490.9 million acquisition of YuuZoo Corporation, one of the world's leading targeted e-commerce social-networking platforms, which would result in a reverse takeover of W Corp.