Sep 05, 2014

    STI down as Ukraine crisis rears its head

    NEWS that a ceasefire in Ukraine had collapsed sent European stocks down and snapped a two-day winning streak for local shares yesterday.

    The gloomy mood sent the benchmark Straits Times Index (STI) down 2.4 points to 3,346.34, with 1.77 billion shares worth $1.1 billion changing hands.

    The most active stock by volume was supermarket operator Sheng Siong, which shed nearly 5 per cent or 3.5 cents to 67.5 cents, with 178.8 million shares changing hands.

    The firm had announced before the market opened yesterday that it will offer 120 million new shares through a placement exercise, at 67 cents each, to raise gross proceeds of about $80.4 million.

    "The share price fell because the placement issue is priced below market price, which would result in share dilution," remisier Alvin Yong said.

    Energy firm Rex International jumped nearly 6 per cent, or 3.5 cents, to 64 cents, with 40.5 million shares changing hands after announcing that it is raising gross proceeds of $95.76 million through a placement exercise of up to 168 million shares at 57 cents per share.

    Fraser & Neave rose 3.7 per cent or 11 cents to $3.09 on speculation that it may delist and privatise its associate, Fung Choi Media Group, to improve shareholder value.

    "If Fung Choi's share price continues to remain in the doldrums, there is a risk F&N may have to book an impairment charge on their balance sheet," a remisier said. F&N holds a 29.5 per cent stake in Fung Choi.

    "If F&N buys out the Fung Choi shares that it doesn't own, Fung Choi's assets - which are worth about HK$700 million (S$113 million) - will be transferred to F&N's balance sheet," he said. "Based on its third-quarter results, Fung Choi's net asset value is 44 cents a share."

    Fung Choi called for a trading halt yesterday pending an announcement. China Kunda Technology Holdings, Charisma Energy Services and Giken Sakata also made similar requests to the Singapore Exchange yesterday.

    The constituents of the STI will remain unchanged following the conclusion of a quarterly review, the Singapore Exchange, FTSE Group and Singapore Press Holdings announced in a joint statement yesterday.

    The STI reserve list, comprising the five highest ranking non-constituents of the STI by market capitalisation, will be Keppel Land, UOL Group, CapitaCommercial Trust, Suntec Reit and Yangzijiang Shipbuilding Holdings.

    Companies on the reserve list will replace any constituents that become ineligible as a result of corporate actions before the next review on Dec 4.

    Several changes were also made to other indices in the FTSE ST Index Series. All changes from this review will take effect from the start of trading on Sept 22.