Mar 26, 2014

    Stocks take a break after Monday surge

    SINGAPORE stocks took a breather yesterday after their biggest gains in six months on Monday.

    The Straits Times Index (STI) fell 7.66 points or 0.25 per cent to 3,104.17, while the broader FTSE ST All-Share Index was behind by 0.23 per cent.

    Regional markets were lower after Wall Street's overnight declines. Some traders here were taking profits off the table after the STI rose 38.44 points or 1.25 per cent on Monday - its largest single-day rise since Sept 9 last year.

    But the declines yesterday were mitigated by ongoing hopes that China will need to unveil stimulus measures after releasing weak manufacturing data.

    "The market is balancing the impact of soft Chinese manufacturing data with expectations about Chinese policymakers' next moves to maintain the pro-growth policy," said CMC Markets analyst Kenny Kan.

    "Expectations are heightening that Chinese policymakers will adopt measures to achieve their targeted gross domestic product growth of 7.5 per cent."

    SingTel rose one cent or 0.3 per cent to $3.57, while StarHub fell one cent or 0.2 per cent to $4.10. Fellow telco M1, which is not on the STI, declined three cents or 0.9 per cent to $3.40.

    "Both M1 and SingTel reported quarterly results that came in within our expectations, while StarHub's results tracked below forecast," said OCBC Investment Research in a note on the telcos.

    "As before, the spectre of rising interest rates is looming; but the recent pullback in the telcos' share prices is starting to bring dividend yields back towards the 5 per cent handle, with the average forecast being 4.8 per cent."

    OCBC said telco stocks should continue to have a place in any portfolio because of their defensive earnings, and maintained its "neutral" call on the sector.

    It has a "buy" on SingTel with a $3.74 fair value; "hold" on M1 which it values at $3.30; and "sell" on StarHub with a fair value of $3.81.

    Albedo fell 0.6 cent or 18.75 per cent to 2.6 cents as 207.8 million shares changed hands. That meant it gave up more than Monday's gains of 0.2 cent.

    Traders continued to be concerned that Malaysian tycoon Danny Tan would call off his deal to inject his Johor land assets into Albedo.

    Albedo said on Friday that Mr Tan's representatives had requested that the agreement for the deal be "mutually terminated". But the firm added that the agreement remains valid and binding as the parties have not reached any mutual agreement to terminate it.

    Elsewhere in the region, Hong Kong lost 0.5 per cent, while Tokyo fell 0.4 per cent.