Sep 02, 2015

    STI slides for second day

    THE local market lost ground for a second straight day, in line with region-wide declines, reflecting the still fragile sentiment among investors after last week's volatility.

    The benchmark Straits Times Index (STI) fell 38.67 points or 1.32 per cent to close at 2,882.77 yesterday after a sell-down in the final hour.

    About 1.75 billion shares worth $1.03 billion changed hands.

    The drop suggested that the rebound late last week might be short-lived, as the STI continues to struggle following the 16 per cent slump from July 20 to Aug 24, when fears over China's slowdown and Beijing's sharp devaluation of the yuan caused a global rout.

    CMC Markets analyst Nicholas Teo cautioned: "My advice to clients is that this is a rebound not for you to buy in, but to trim position on. We are seeing what could be the new market norm, a landscape with many moving parts including the rate hikes by the Federal Reserve.

    "The weak China figures, Bangkok's bombing and the protests in Kuala Lumpur are not giving reasons for funds to stay in Asia either."

    On Wall Street, the Dow Jones Industrial Average lost 0.69 per cent overnight, as investors were jittery over the speech by Fed vice-chairman Stanley Fischer who gave further indications that the Fed will raise rates this month.

    In Asia, sentiment was further dampened yesterday after fresh official data showed that China's manufacturing activity last month fell the most in three years.

    Shanghai shed 1.23 per cent as a result, while Hong Kong lost 2.24 per cent and Kuala Lumpur pared 0.22 per cent.

    But Tokyo fell the most in the region, down 3.84 per cent.

    Against the grim backdrop, most of the blue chips in Singapore were hammered: Among STI's 30 component stocks, 27 dropped and the other three went sideways.

    Commodity plays, which had been lifted on Monday by a recent improvement in oil prices, were back in the doldrums.

    Noble Group was the top losing counter of the bunch, closing 2.5 cents or 4.59 per cent lower at 52 cents, while Olam International sank 8.5 cents or 4.11 per cent to $1.985.

    But Maybank Kim Eng analyst Wei Bin raised Olam's target price to $2.15, on last week's news that it will partner with Mitsubishi via a placement of 332.7 million new shares to raise some $915 million.

    Meanwhile, Noble received a vote of confidence from shareholder Prudential, which raised its holding in the embattled firm from 8.76 per cent to 9.01 per cent yesterday.

    Outside the STI, Ezra Holdings was the most active counter on the market with more than 266.5 million shares changing hands.

    It fell 0.2 cent or 1.54 per cent to 12.8 cents.

    This cut short Ezra's upward trajectory since Aug 24, following the offshore and marine company's agreement to sell up to 50 per cent stake in Emas AMC to Chiyoda Corporation.