Nov 14, 2013

    Uncertainty in China hurts Asian bourses

    The Straits Times

    THE lack of a clear reform strategy from China's leaders disappointed investors across the region, with share prices feeling the pain.

    A weak finish on Wall Street overnight only added to the gloom in Asia.

    Investors were hoping for a detailed game plan for sustained growth at the end of the Chinese Communist Party's Third Plenum, but instead were given a vaguely worded communique saying that the government intended to give the market a more "decisive" role in allocating resources.

    "Retail investors had high expectations of the Third Plenum. But the communique failed to address how the government will proceed with a range of vexing issues, such as reforms in the state-run financial sector and household registration," said Ms Amy Lin, an analyst at Capital Securities, in an interview with Agence France-Presse.

    The downbeat mood sent the benchmark Straits Times Index down 13.51 points, or 0.42 per cent, to 3,166.74.

    Other regional bourses also ended lower, with Hong Kong down 1.91 per cent, Shanghai retreating 1.83 per cent and Tokyo off 0.15 per cent.

    Noble Group was the most active stock at home, falling three cents to $1.05 on a turnover of 87.3 million shares. The commodity player had said on Tuesday that its third-quarter net profit was down 70 per cent due to losses in its associate Yancoal Australia.

    Other commodity stocks were mixed, with Wilmar International sliding two cents to $3.47, Indofood Agri declining three cents to 86.5 cents, and Golden Agri Resources rising half a cent to 57 cents.

    OCBC Investment Research has maintained its "sell" call on Golden Agri, with analyst Carey Wong noting yesterday that the firm has "continued to feel the brunt of weaker crude palm oil prices and suffered another disappointing quarter".

    "While the worst may be over, we note that the recent price rally looks overdone," he added.

    City Developments dropped 10 cents to $9.98 after posting a 10 per cent slide in its third-quarter net profit. Maybank Kim Eng Research analyst Wilson Liew maintained his "sell" call on the developer, saying that it faces tougher times at home.

    "With limited opportunities in Singapore due to high land costs, CDL has made its first acquisition in London, acquiring a multi-storey carpark in Knightsbridge for £80 million (S$159 million) with the intention of redeveloping it into a luxury residential development," he wrote in a note yesterday. "However, London land costs are also rising."