Nov 18, 2014

    STI falls with rest of Asia as Japan slips into recession

    SINGAPORE shares fell sharply yesterday in line with other Asian bourses, as Japan's economy unexpectedly fell into a recession.

    The benchmark Straits Times Index dropped 27 points, or 0.81 per cent, to 3,288.67.

    Tokyo stocks, which had surged more than 10 per cent this month, fell 2.96 per cent.

    Sydney lost 0.77 per cent and Seoul was flat. Shanghai closed down 0.19 per cent and Hong Kong sank 1.21 per cent.

    "After a significant rally on the Bank of Japan's decision to introduce more stimuli, the market is reacting to shock that there was actually a recession there," said Francois Savary, chief investment officer of Reyl & Cie in Geneva, in an interview with Bloomberg.

    "It's time to take back some of those gains but not to overreact. The weakness of Japan really increases the fact that we rely too much on the US to support global growth."

    Yesterday was the start of the Shanghai-Hong Kong Stock Connect. With the new link, international investors can gain access to selected stocks in the domestic Chinese stock market directly.

    The Singapore Exchange noted that as interest in the Stock Connect grew this year, Chinese equities saw an increase in trading.

    "In conjunction, the SGX China A50 futures contract...also saw a jump in trading volume. In the last week, the futures contract saw some US$1.4 billion (S$1.8 billion) traded in average daily notional turnover and open interest climbing to reach 385,000 contracts by Nov 14," SGX said in a market update.

    Thai Beverage was the top active at home, falling 4.5 cents to 71.5 cents on a turnover of 68.8 million shares.

    The company had said on Friday that net profit for the three months to Sept 30 fell 9 per cent to 3.72 billion baht (S$147 million) from the same period a year earlier.

    SingTel dipped two cents to $3.93. Maybank Kim Eng reiterated its "buy" call on the telco after it reported a 19 per cent rise in second-quarter net profit on Thursday.

    "We forecast 3 per cent profit growth for this year, continuing its growth from last year," wrote analyst Gregory Yap in a note.

    "We further expect 8 per cent growth next year as (SingTel's Australian unit) Optus is now growing again after its restructuring and is regaining mobile market share."

    Olam International slipped nine cents to $2.16.