Jun 17, 2015

    STI sinks below 3,300 support level again

    JITTERS over a possible Greek exit from the euro zone and uncertainty ahead of a United States Federal Reserve meeting hammered bourses across Asia for a second day, sending local shares below the 3,300-point support level yesterday.

    The benchmark Straits Times Index sank 0.9 per cent to an intra-day low of 3,292.67 before closing at 3,298.09, 25.04 points lower, with 1.08 billion shares worth $824.3 million traded.

    "There may be concerns that Singapore would be significantly affected via the trade channel if a Grexit contagion spreads throughout Europe and the US financial system," IG market strategist Bernard Aw said.

    "The index swiftly made a run below strong 3,300 support early on, and made quick work of short covering interests," he said.

    Noble Group was again the most actively traded stock after stepping up its share repurchases for a third time on Monday, adding 13 million shares to the 50 million bought since Thursday.

    "We continue to see the possibility of a dead cat bounce in Noble's shares as underlying fundamentals remain unchanged," Mr Aw said.

    A dead cat bounce is a short-lived recovery in the price of a declining stock.

    Its shares jumped to a high of 74 cents before closing flat at 72 cents, with nearly 65 million shares traded. It closed at 68.5 cents on Friday.

    Speculative plays continued to be among the most actively traded stocks in a depressed market, with Debao Property gaining 2.3 per cent or 0.2 cent to 8.9 cents, with 40.3 million shares traded.

    LionGold jumped 5 per cent or 0.1 cent to 2.1 cents, with 26.9 million shares traded.

    Market participants say the STI's next technical support is at 3,280, with more volatility expected ahead of the resolution of the Greek debt crisis and outcome of the Fed meeting this week.

    "Until the Grexit issue clears up, or gets postponed yet again, any further upside is not sustainable," a remisier said.

    "But if US Fed chair Janet Yellen comes out with unexpectedly dovish statements, that could help the market. Although no one is really expecting that."

    The Jardine group of companies and banking counters weighed down the local bourse.

    Jardine Matheson slipped 3.7 per cent or US$2.10 (S$2.82) to US$55; Jardine Strategic fell 3.7 per cent or US$1.17 to US$30.36; Jardine Cycle & Carriage lost 0.3 per cent or 12 cents to $36.03.

    DBS Group Holdings shed 1 per cent or 21 cents to $20.54; OCBC Bank dipped 0.4 per cent or four cents to $9.99 and United Overseas Bank fell 0.5 per cent or 12 cents to $22.80.

    Concerns over the Middle East respiratory syndrome (Mers) sent shares of Singapore Airlines slipping 1.6 per cent or 17 cents to $10.42.

    While Mers is seen to be affecting the aviation industry, especially the airline businesses, analysts say there is little risk of it dampening investor sentiment as the situation appears to be under control.