Nov 21, 2014

    Weak China data takes wind out of STI's sails

    SINGAPORE shares snapped a two-day rally to sink into negative territory yesterday, as more weak manufacturing data out of China spread gloom across the region.

    The overnight release of minutes from the United States Federal Reserve's latest meeting also failed to excite the market, as they revealed little of the central bank's plans with regard to the timing of interest-rate hikes.

    Kirk Hartman, president and chief investment officer of Wells Capital Management in Los Angeles, said on Bloomberg Television: "To me, the Fed is still steady as she goes and I think next week, the story will be that there are no imminent rate hikes until late next year."

    The local benchmark Straits Times Index ended the day 18.96 points or 0.57 per cent lower at 3,315.6.

    Most Asian bourses were also muted, with Tokyo and Shanghai unchanged.

    Seoul fell 0.45 per cent, Sydney sank 0.98 per cent and Hong Kong lost 0.1 per cent.

    Commodity stocks at home were mostly lower, as crude palm oil prices fell for a second day.

    Golden Agri-Resources dropped a cent to 45 cents, First Resources slipped two cents to $1.94 and Indofood Agri Resources lost a cent to 76.5 cents.

    Mewah International was unchanged at 38.5 cents and Noble Group was flat at $1.205, while Wilmar International bucked the trend by rising a cent to $3.25.

    SingTel, among the most actively traded stocks yesterday, slipped three cents to $3.90. The telco said last week that second-quarter net profit rose 19 per cent to $1.04 billion.

    A Singapore Exchange report yesterday noted that the three local banking stocks have generated an average total return of 14.2 per cent this year, outperforming the benchmark STI.

    The three have made gains of 4.8 per cent on average this month alone, the report said.

    DBS Bank fell 16 cents to $19.56 yesterday, OCBC Bank gave up 15 cents to $10.35 and United Overseas Bank gained a cent to $23.38.

    UOL Group slid a cent to $6.49. CIMB Research analyst Lock Mun Yee yesterday maintained an "add" call on the stock, following a meeting with the developer's managers.

    "The stock offers value through its diversified business model," she wrote. "In the longer run, the target to establish a 70-30 asset split in Singapore versus overseas would enable it to widen its geographic footprint to both developed and emerging economies."