STI slips ahead of key Fed meeting
THE Straits Times Index (STI) yesterday dipped ahead of the United States Federal Open Markets Committee meeting this week, when an interest rate hike could be announced.
The STI drifted to a 16.56 points loss at 2,871.47, The Business Times reported.
There was no post-General Election rally to speak of, despite the ruling People's Action Party scoring a decisive win at the polls on Friday. Instead, traders said the market was more concerned with a murky external environment.
A clear indication of the caution shrouding trading was volume traded. At 1.2 billion units worth $857 million, this was thin, even by this year's low standards. Excluding warrants, the advance-decline score was 173-231.
The average value per unit traded was $0.71 and, of the 20 most active stocks, 13 were priced below $0.20. Stocks which rose or held firm last week such as Noble Group, YuuZoo and Stratech came under pressure, although shipbuilding counter Yangzijiang continued to gain ground on news that it will soon be included in the STI.
Conversely, Jardine Matheson and Jardine Strategic, which will be dropped from the STI next Monday, continued to weaken.
"Everyone is waiting to see what the Fed does this week," said a dealer. "There's also China, where people are waiting to see what more stimulus the government might announce."
Elsewhere, China's stocks fell yesterday after data suggesting economic growth was running below this year's target level of about 7 per cent heightened concerns about the health of the economy.
China's benchmark CSI300 index of the biggest listed stocks in Shanghai and Shenzhen closed down 1.97 per cent, while the Shanghai Composite Index dropped 2.67 per cent.
China CSI300 stock index futures fell, some by as much as 7 per cent, underlining investor scepticism in the stock market's upside potential, reported Reuters.
The economic concerns offset the impact of plans announced at the weekend to reform the bloated state-owned enterprise sector and produce "decisive" results by 2020.
Underscoring the fragility of China's financial markets even after some respite last week, currency traders suspected that the central bank intervened to prop up the yuan in onshore markets, which wobbled following a report that net capital outflows in the first quarter of the year were more than US$100 billion (S$141 billion).
"China's economy faces relatively big downward pressure, so investor sentiment remains weak," said Gu Yongtao, strategist at Cinda Securities.
China's stock markets have been on a roller-coaster ride in the past few months, falling close to 40 per cent since June and prompting frantic efforts by the authorities to restore confidence. Still, at their peak this year, they were up more than 150 per cent compared with the lows of last year.
Another market that fell was Japan. Tokyo ended 1.63 per cent lower, hit by big losses in telecom firms after media reported comments from Japan's prime minister on the need to reduce mobile phone fees.
But other markets in the Asia-Pacific region rose. Hong Kong shares rose yesterday, but the gains were limited by a sharp correction in mainland stocks, as investors await this week's rate decision by the Fed.
The Hang Seng index rose 0.3 per cent, while the China Enterprises Index gained 0.1 per cent.
Sydney closed 0.5 per cent higher. Kuala Lumpur surged 2.3 per cent, after the Malaysian government said it would inject US$4.6 billion to bolster its stock market - which has fallen 9 per cent this year - and spend millions more on infrastructure projects, in a bid to stimulate the slowing economy, reported Agence France-Presse.