Aug 07, 2014

    STI dips as Ukraine heats up

    SINGAPORE shares moved mildly south yesterday, joining most key markets across the globe in the red as tensions over Ukraine escalated.

    The Straits Times Index (STI) eased 7.44 points, or 0.22 per cent, to 3,320.23. Trading volumes remained muted, with 1.4 billion shares worth $972 million done.

    "It's becoming increasingly clear that Russia is scaling up its operations at the border despite being hit by tougher sanctions from the West," said CMC Markets analyst Desmond Chua.

    Key Asian bourses lost ground, with Japan 1.05 per cent behind, Hong Kong down 0.26 per cent and South Korea retreating 0.27 per cent.

    European stocks also suffered a weak showing last evening, with most major markets down over 1 per cent.

    Experts said global market sentiment was also dampened after two large merger and acquisitions deals were withdrawn.

    Rupert Murdoch's 21st Century Fox withdrew its US$80 billion (S$100 billion) offer to acquire Time Warner, while Sprint, the United States carrier controlled by Japanese billionaire Masayoshi Son, dropped its bid to buy carrier T-Mobile US after regulatory resistance showed no signs of softening.

    Back home, 17 of the 30 STI component counters declined, with nine gainers and four unchanged. Several blue chips were in the spotlight after unveiling quarterly earnings earlier this week.

    Despite reporting second-quarter earnings which were within analyst expectations, property play CapitaLand dropped seven cents to $3.37.

    CIMB, which has an "add" rating with a price target of $3.83, noted: "With its capital recycling model still intact and as it continues to harness its competitive strengths to carry out strategic capital allocation and enhance shareholder value, the group is well placed to grow its return on equity in the long run."

    StarHub slipped five cents to $4.18 after its net profit dipped 6.3 per cent. DMG, which has a neutral rating and target price of $4.20, said: "StarHub's results missed both the street and our estimates in the absence of a fibre adoption grant in the second quarter, as well as mobile revenue weakness."

    In contrast, SingPost rose 1.5 cents to $1.775 after posting a 5.1 per cent climb in net profit on Tuesday. OCBC Investment Research, which has a hold call with a price target of $1.71, noted: "The transformation of SingPost holds great promise for the group but time is still needed for it to fill in the missing infrastructure pieces for this region."

    The day's most active was International Healthway Corp, which gained half a cent to 26 cents with 73.9 million shares changing hands.