STI weighed down by China and US

DOWN DESPITE PROFIT RISE: Rig builder Sembcorp Marine's shares fell nine cents to $3.97 despite its net profit rising 3.1 per cent in the first quarter.


    May 06, 2014

    STI weighed down by China and US

    LOCAL shares edged lower yesterday on disappointing manufacturing figures from China and a muted reaction to Friday's healthy employment numbers from the United States.

    The downbeat mood sent the benchmark Straits Times Index (STI) down 10.95 points or 0.34 per cent to 3,241.6.

    A private reading on Chinese manufacturing activity yesterday came in weaker than expected.

    "Wall Street pulled back slightly last Friday despite healthy jobs data as investors are still unclear as to how much more markets can rally in the current environment," said NetResearch Asia in a note.

    "They would be looking for some clues in the middle of the week, when Fed chairperson Janet Yellen addresses Capitol Hill on the state of the American economy."

    NetResearch Asia noted that the US jobless data for last month was better than expected.

    "Also, corporate results have not disappointed in general and, in certain cases, actually surprised on the upside.

    "The other unknown factor is how the Ukraine situation will evolve and what other sanctions the global superpowers can impose on Russia."

    Elsewhere in the region, Hong Kong lost 1.3 per cent, while Shanghai was flat. Markets in Tokyo, Seoul and Bangkok were closed for public holidays.

    Among STI shares, Sembcorp Marine fell nine cents or 2.2 per cent to $3.97.

    The rig builder on Friday reported a 3.1 per cent increase in net profit to $122.5 million for the first quarter ended March 31.

    Earnings rose on the back of a 27.2 per cent increase in turnover to $1.34 billion, owing mainly to higher revenue recognition from its rig-building activities and offshore platform projects.

    But earnings could have been higher had it not been for an increase in the cost of sales, which rose 30.2 per cent to $1.16 billion.

    Drinks giant Thai Beverage rose 1.5 cents or 2.6 per cent to 60 cents. OCBC Investment Research yesterday initiated coverage of the stock with a "buy" call and target price of 73 cents.

    "(ThaiBev's) current stronghold in Thailand will serve as a relatively steady income pillar as it expands beyond Thailand and into other product segments.

    "ThaiBev, together with (Fraser and Neave), will have access to distribution networks in Singapore, Malaysia, Thailand and Myanmar."

    OCBC thinks that ThaiBev, one of the biggest regional food and beverage companies, will benefit from an enlarged distribution network, more diversified product range and a large war chest for marketing and capacity expansion.