Jun 12, 2014

    STI down for 2nd day amid penny plays

    SINGAPORE blue chips continued to slip from their recent highs as traders cashed out on gains.

    The benchmark Straits Times Index yesterday slid 3.78 points or 0.11 per cent to 3,290.04.

    The index has backtracked for two days since hitting a one-year high of 3,305.2 on Monday.

    "Rotational plays among the penny caps continue to dominate trading in an otherwise quiet market," said a note by NetResearch Asia.

    The most active stock was Blumont Group, down half a cent or 7.8 per cent to 5.9 cents as 225.65 million shares changed hands.

    The stock had risen strongly in recent weeks. Tuesday's closing price of 6.4 cents was more than double the value on the morning of May 26 - it had traded at just 2.7 cents at that time.

    So traders were taking profits off the table yesterday.

    Blumont was one of the three stocks involved in October's dramatic penny stock crash.

    The other two - LionGold Corp and Asiasons Capital - have also climbed recently, and both declined yesterday due to profit-taking.

    The second most active stock was Teledata (Singapore), which lost 0.2 cent or 50 per cent to 0.2 cent, on 205.22 million shares.

    The company said on Tuesday night that the Singapore Exchange (SGX) will proceed to delist it.

    This is because the SGX is uncertain if Teledata will be able to meet the requirements to get itself removed from the SGX watch list of loss-making companies.

    Among blue chips, decliners on the STI included Global Logistic Properties, which lost nine cents or 3.3 per cent to $2.67.

    But SIA Engineering Company rose one cent or 0.2 per cent to $5.07.

    Maybank Kim Eng Research yesterday maintained its "buy" call on the stock, with a target price of $5.75.

    Maybank Kim Eng had hosted the management of SIA Engineering at a non-deal roadshow in Singapore on Tuesday, the note said.

    The company's management acknowledged investors' concerns over labour cost pressures in Singapore, but highlighted that its operational efficiency would compensate for the disadvantage of operating in a country with a relatively high labour cost base.

    Maybank Kim Eng said it remains positive on SIA Engineering following the roadshow, and reiterated its view that the company offers the best proxy to the structural air traffic growth in the region.

    "However, we sense the cautious undertone in management's commentary and see it as an attempt to manage market expectations."

    Maybank Kim Eng forecasts that the stock will continue to offer a dividend yield of about 5 per cent over the next few years.