STI recovers as US indices fall on sliding oil prices
LOCAL shares ended higher yesterday as traders shrugged off the further skid in oil prices that left Wall Street in a bearish mood on Monday.
The benchmark Straits Times Index (STI) recovered from Monday's 0.8 per cent dip to gain 22 points, or 0.67 per cent, to close at 3,319.84.
The performance was in contrast to the 0.59 per cent fall in the Dow Jones Industrial Average overnight while the S&P 500 dropped 0.73 per cent.
The declines came as Brent futures for next month fell to a new five-year low of US$66.62 per barrel on Monday, sparking a sell-off in energy shares while doubts over the global growth outlook added to the pessimism.
Energy plays here were equally vulnerable. Ezion dropped seven cents, or 6.17 per cent, to $1.065, furthering the 4.5 cent fall on Monday. Nam Cheong sank 2.5 cents or 7.35 per cent to 31.5 cents, while Sembcorp Marine closed two cents lower at $2.89.
Kim Heng Offshore, which dropped 1.4 cents or 9.33 per cent to 13.6 cents, received a downbeat assessment from OCBC Investment Research analyst Low Pei Han, who wrote: "With oil-price forecasts being cut across the board, we think that order flows are likely to slow even further."
Other sectors fared better, with banking stocks among the top gainers: DBS Group Holdings advanced 36 cents to $19.86 while OCBC added 21 cents to $10.41.
Singapore Airlines and Tiger Airways also closed higher. SIA rose 20 cents to $11.20 and Tigerair gained one cent to 28.5 cents.
Following a share-conversion scheme on Monday, Tigerair is now a subsidiary of SIA, putting the loss-making low-cost carrier on firmer track for a turnaround.
Meanwhile, film company mm2 Asia closed flat on its Catalist debut at 25 cents but engineering firm Huationg Global got off to a great start, closing three cents or 15 per cent up at 23 cents in its debut.
Elsewhere, major Asian markets closed lower amid the oil rout.
Shanghai dropped 5.4 per cent - the largest dip since August 2009 - after a two-week rally that drove the index to heights not seen since April 2011.
The over-speculation and "irrational surge" of the past two weeks have set the stage for this correction, Zhang Gang, a strategist at China Central Securities, told Bloomberg.
Hong Kong tumbled 2.34 per cent, while Tokyo fell 0.68 per cent, snapping a week-long streak amid a rebound in the yen while fears persist that Japan's recession is deeper than expected.