Mar 19, 2015

    STI falls again ahead of Fed statement

    UNCERTAINTY over the United States central bank's take on interest rate hikes sent local shares down yesterday.

    The Straits Times Index fell 8.2 points or 0.2 per cent to 3,361.75, its second straight day of losses and the seventh time it has fallen into negative territory in the past eight trading sessions.

    Turnover stood at $1 billion with some one billion shares changing hands, lower than the $1.2 billion seen in the previous day.

    Investors were choosing to cash out and wait on the sidelines until they get a better view on when the US Federal Reserve may normalise interest rates.

    The Fed was due to release its monetary policy statement at 2am today, Singapore time.

    "People are reluctant to do anything until they see net volatility pass through the market," ANZ Bank analyst Sam Tuck told Bloomberg.

    Most Asian bourses were higher, shrugging off the US interest rate hike concerns, with markets in Greater China still enjoying a rally thanks to a government pledge to do more to support China's economy.

    Tokyo added 0.6 per cent, Shanghai gained 1.6 per cent and Hong Kong rose 1.2 per cent, while Seoul was little changed.

    Commodities firm Noble continued to come under pressure, losing 3.5 cents to 86.5 cents, the lowest since September 2013. The stock was the second-most active counter with 57.2 million shares traded, as worries about its earnings and pressure from record bond maturities led to the sell-off.

    Telco Singtel was the biggest drag on the STI, contributing to a 3.4-point fall. It dropped four cents to $4.13 on news that it was being investigated by the Infocomm Development Authority for an online marketing campaign that allegedly called on bloggers to complain about its rivals' services. StarHub lost seven cents to $4.17 while M1 was four cents lower at $3.79.

    Banking stocks were mostly higher after brokerage KGI Fraser gave the sector an "overweight" call in a report. It expects the lenders to benefit from rising interest rates, choosing DBS as its top pick as it expects the bank's strong private banking and investment banking business to do well. DBS rose 14 cents to $19.90 and United Overseas Bank gained two cents to $22.60, but OCBC Bank lost three cents to $10.23.

    Pawnbroker ValueMax dipped a cent to 35 cents after it said it intends to buy several Housing Board leasehold properties in Waterloo Street from automotive components and consumer products firm Tye Soon for $11 million. Tye Soon rose 1.1 cent to 14.3 cents.