Apr 01, 2016

    STI drops on banks' lowered credit rating

    PROFIT-TAKING and a credit-rating downgrade of four local banks sent Singapore shares sliding back into negative territory yesterday.

    The Straits Times Index slipped 1.11 per cent or 31.88 points to 2,840.90 to end 1.45 per cent down for the quarter.

    Banking counters delivered the biggest hit yesterday. OCBC Bank dropped 1.2 per cent or 11 cents to $8.84, United Overseas Bank slid 0.9 per cent or 18 cents to $18.87 and DBS Bank shed 0.7 per cent or 11 cents to $15.38.

    "The profit-takers were out early in the morning, but that accelerated after news of the Moody's downgrade of Singapore banks' credit rating hit the market," remisier Alvin Yong said.

    Moody's Investors Service lowered the credit rating outlook of DBS Bank, DBS Group Holdings, OCBC and UOB from stable to negative, citing concerns over asset quality and profitability.

    Penny plays were hotly traded, with several companies being queried by the Singapore Exchange over unusual price or volume movements.

    MFS Technology, whose stock plummeted 77 per cent or 8.6 cents to 2.5 cents, with nearly 101 million shares traded, said it could not explain the unusual volume movements. But the technology firm said it had announced that the books closure date of a capital reduction exercise was set for Monday. The exercise involves a cash distribution for each share.

    "Yesterday was the ex-entitlement date, which means entitled shareholders should get 10.733 cents for each share held as at the books closure date," Mr Yong said.

    When queried, logistics provider CWT, which gained 1 per cent or two cents to $1.96, said it could not explain the movement in its stock.

    On Aug 3 last year, however, it announced a strategic review of its business and assets by controlling shareholder C&P Holding, "which may or may not lead to a transaction involving the company".

    Envictus International, whose shares were up 7.4 per cent or 4.5 cents to 65.5 cents, was also queried on unusual stock price movement.

    KS Energy tumbled 10.2 per cent or 2.1 cents to 18.4 cents after auditors expressed concern over its ability to continue as a "going concern".

    DBS Group Research reiterated a fully valued call on Nam Cheong following news of the termination of a contract for an accommodation work barge from Petra Offshore. The offshore support vessel builder's stock dipped 1.8 per cent or 0.2 cent to 10.8 cents.

    "Although this marks Nam Cheong's first order cancellation since the oil price collapse, we think outright cancellations should continue to be fairly rare," it said.

    Social networking firm YuuZoo jumped 16.8 per cent or 3.3 cents to 23 cents after news of an agreement with Alibaba Sports Group to organise and run an e-sports tournament and manage e-sports club competition centres.