Aug 27, 2014

    STI dips as Wall St scales fresh heights

    SINGAPORE shares dipped yesterday amid mainly downbeat regional markets, as investors grappled with soaring Asian equity valuations despite another record high on Wall Street.

    The Straits Times Index (STI) shed 7.22 points to 3,323.02 as regional stock valuations reached their highest levels this year.

    Trading volumes here remained modest, with 1.5 billion shares worth $793.9 million changing hands.

    Brokers said the mood here remained muted, with action mainly on several penny stocks such as Sincap Group, International Healthway Corp and Artivision Technologies.

    Overnight, Wall Street continued to scale fresh heights, with the much-watched Standard & Poor's 500 Index adding 0.5 per cent to a record, even briefly crossing the 2,000 mark for the first time during the session.

    While this set the scene for a bright start here, these early gains fizzled out as most key Asian markets headed towards negative territory.

    The notable MSCI Asia Pacific Index slid 0.2 per cent. Before that, two weeks of increases had pushed the price-earnings ratio on the measure to 13.7 yesterday - the highest since December - as concern over conflicts in Iraq, Israel and Ukraine eased, Bloomberg reported.

    Major regional markets closed largely lower, with Japan down 0.59 per cent, Hong Kong back 0.37 per cent and Shanghai retreating nearly 1 per cent.

    Here, the 30 STI component stocks ended mostly lower, with 14 losers, nine gainers and seven unchanged.

    Stocks that declined included Thai Beverage, which eased 1.5 cents to 65 cents as traders locked in profit following the counter's sharp rise in recent weeks.

    Several blue chips also had a bearish outing, with Genting Singapore dipping 2.5 cents to $1.21 and City Developments tumbling 13 cents to $10.20.

    But other counters fared better, with Singapore Airlines adding 12 cents to $10.08.

    HSBC Global Research noted: "A potential recovery in airlines looks to be primarily long-haul-driven... and a turnaround in an extremely weak cargo market would probably be the most powerful earnings driver, if it occurs."

    HSBC added that major network airlines Singapore Airlines and Cathay Pacific have "significant upside potential".

    Cordlife Group came under investor attention after reporting full-year earnings on Monday, rising four cents to $1.27.

    DMG & Partners noted: "Low industry penetration rates in growth markets should result in higher client deliveries for Cordlife and continue to drive earnings growth going forward."

    The broker added that the company's margins should also improve, aided by more efficient cost management, a lack of one-off cost related to venturing into new markets, and higher royalty income from its partners, Stemlife and China Cord Blood.

    The day's most active stock was Sincap, which increased 1.8 cents, or 12.6 per cent, to 16.1 cents with 97 million units done.