Nov 19, 2015

    STI slips on Paris police terror raids

    A DOUR mood continued to hang over the local market yesterday with more violence in Paris and worries over China's economy dampening market sentiment.

    Singapore's benchmark Straits Times Index (STI) was down 30.7 points or 1.05 per cent to 2,886.08, with only 213.4 million shares transacted across the blue chip counters. Overall market volume was also low, with about 951.1 million shares worth $902.8 million changing hands.

    Elsewhere, markets were also mostly down. Shanghai pared 1.01 per cent, Hong Kong dropped 0.34 per cent and Kuala Lumpur closed down 0.3 per cent but the Nikkei rose a marginal 0.09 per cent.

    The weak regional showing followed news of police terror raids in Paris, a stark reminder to investors of the strong geo-political headwinds and the need to curb risk.

    News from China was just as discouraging with Chinese President Xi Jinping warning yesterday that the economy is still coping with "considerable downward pressure".

    Meanwhile, local investors are still wary of the interest rate outlook with markets bracing for a Federal Reserve rate hike next month, remisier Alvin Yong said.

    "Among the traders, the consensus is that there is an 80 per cent chance for a hike announcement in December, so naturally people are taking a wait and see stance. Beyond the announcement, the question of how fast the rate is raised also remains."

    With these risks on investors' mind, it was no wonder blue chips had a torrid day, with only three STI constituents closing up.

    Ascendas Real Estate Investment Trust was the top gainer of the bunch, up two cents or 0.89 per cent to $2.26. CapitaLand rose one cent or 0.33 per cent to $3.07. SIA Engineering closed one cent or 0.27 per cent up at $3.74.

    Investors were heartened to hear that CapitaLand is optimistic about its growth prospects in China, where the property giant has about $21.4 billion worth of assets, around 46 per cent of the group's total, China chief executive Lucas Loh said this week.

    But the rest of the STI struggled yesterday, with the top losing Yangzijiang Shipbuilding down 3.5 cents or 3.06 per cent to $1.11.

    Energy and commodity stocks were also hammered, as the strong United States dollar further pressured oil and commodity prices. Brent crude futures settled down 2.2 per cent overnight at US$43.57 per barrel.

    Sembcorp Industries lost 10 cents or 2.94 per cent to $3.3, Sembcorp Marine pared five cents or 2.22 per cent to $2.20 and Keppel Corp dropped 12 cents or 1.76 per cent to $6.69.

    Against the choppy backdrop, investors are likely to look more at the opportunities in the small and mid cap segment, Mr Yong noted.

    "I continue to see stocks in the segment trading substantially below their book value. Some, like Neptune Orient Lines (NOL), are getting attention for talk of corporate actions."

    NOL, which rose one cent or 0.89 per cent to $1.13, confirmed on Tuesday that it is still in discussions with foreign conglomerates looking to acquire the shipping firm. NOL had earlier stated that bidders include France's CMA CGM and industry giant Maersk.