Oct 08, 2014

    STI down again after holiday pause

    INVESTORS returned from the long weekend to endure yet another forgettable session that saw shares fall for the fifth time in the past six trading sessions.

    The Straits Times Index shed 9.25 points or 0.28 per cent to 3,243.99 as trading resumed following Monday's Hari Raya Haji public holiday.

    About 1.34 billion shares worth $1 billion exchanged hands.

    Losers outnumbered gainers 239 to 142, with 404 stocks unchanged.

    Investors weighed counter-balancing news that came out over the weekend.

    The United States reported that unemployment dipped to a six-year low of 5.9 per cent. While that is seen as positive, it raises concerns that the Federal Reserve could increase interest rates sooner.

    Worries that the global economic recovery could be running out of steam also added to the selling sentiment as the World Bank cut its growth forecasts for China and other East Asian economies.

    Investors are likely also awaiting clearer signs from corporate earnings in the US for a gauge of how firms here may perform.

    The top-volume counter was penny stock Compact Metal, which added 0.1 cent to 5.5 cents, with 112.9 million shares changing hands.

    United Engineers (UE) gained two cents to $2.85 while its unit, UE E&C, dropped five cents to $1.23 after UE announced it will sell its 68.2 per cent stake in the integrated building solutions provider for $230.2 million or $1.25 a share.

    CIMB analysts Tan Xuan and Lock Mun Yee said in a report that the move is not surprising, given UE's recent divestment of non-core property assets.

    "We believe the pre-conditional voluntary offer paves the way for the potential takeover by Thai tycoon Charoen Sirivadhanabhakdi, who is eyeing UE's property portfolio," they said.

    Yongnam Holdings fell 0.3 cent to 19.5 cents after it said a unit will sell an asset in Johor for RM153.5 million ($60.1 million) and will lease back the property for 15 years.

    Chipmaker Stats ChipPAC lost two cents to 58 cents after it was served a writ of summons by ERS Electronic GMBH for allegedly infringing patents related to equipment used in the wafer assembly process.

    Stats ChipPAC said it believes the claim is without merit.

    Elsewhere, Hong Kong rose 0.46 per cent, its third straight day of gains on news that progress was being made in talks between protesters and government officials as demonstrations peter out.

    Tokyo lost 0.67 per cent after the Bank of Japan disappointed markets by not increasing its monetary stimulus measures despite noting weaknesses in industrial production.

    Shanghai remained closed for China's Golden Week public holiday. It resumes trading today.