Aug 14, 2014

    STI slips on interest-rate hike worries

    LOCAL shares slipped yesterday, with investors concerned over impending interest rate hikes in the United States and possible lacklustre earnings from some index heavyweights.

    The unease left the benchmark Straits Times Index down 1.98 points to 3,301.41, with 1.63 billion shares worth $801.2 million changing hands.

    Among the top five value counters, DBS shed 1.4 per cent or 26 cents to $17.78, with 3.74 million shares changing hands, while SingTel lost one cent to $3.91, with 10.3 million shares changing hands, after a CIMB report yesterday said the telco's first-quarter earnings are likely to be flat.

    CIMB blames the company's Australian unit, Optus, which it expects to suffer from seasonally weaker earnings. "We think the weak performance from Optus will persist through fiscal year 2015, due to the recent re-pricing of its most popular packages and higher marketing costs to address market competition," it said.

    Genting Singapore has come under pressure ahead of the release of its second-quarter earnings today. The casino operator shed 1.2 per cent or 1.5 cents to $1.27, with 18.5 million shares changing hands.

    "The valuation for Genting is looking quite rich at the moment. The drop in Chinese tourist arrivals in Singapore and the depreciating yuan could have an impact on Genting's earnings," remisier Alvin Yong said.

    ST Engineering shed 0.5 per cent or two cents to $3.78, after it reported a 10 per cent slump in net profit to $133.16 million for the second quarter as revenue dipped slightly and costs rose.

    Catalist-listed Singapore eDevelopment jumped 20 per cent or 0.1 cent to 0.6 cent, after it announced it is buying software developer HotApps, which owns applications for instant messaging, social media and e-commerce. The company also entered into a memorandum of understanding to acquire CloudTel, a cloudbased communications solutions provider in China.

    Meanwhile, strong US jobs figures on Tuesday could sharpen the debate on the timing of the first interest rate increase from the Federal Reserve.

    "There are now concerns over whether the Fed will terminate quantitative easing a month earlier, in September, which means interest rate hikes could start earlier as well," Mr Yong said.