Business

STI gets boost, then falls

Brokers cite upcoming holidays and withdrawal of capital from emerging markets as reasons

Trading yesterday was quiet with turnover amounting to a low 1.4 billion units worth $789.4 million. Rises in the three banks helped the Straits Times Index move into the black intraday but the momentum was not sustained, the index closing with a net loss of 0.68 of a point at 2,910.63.

Brokers described the session as largely devoid of features but added this was to be expected, given the upcoming holidays and withdrawal of capital from emerging markets triggered by expectations of a faster-than-forecasted US interest rate hiking cycle.

The session's most actively traded stocks were movie firm Spackman, commodities firm Noble Group, and oil and gas firm Ezra, while the most actively traded index members were Golden Agri Resources, Singtel and Genting Singapore.

DBS Group has been the main index mover for the past few weeks and so it has been again for the past few sessions.

After dropping sharply on Monday and Tuesday, the stock rebounded first to an intraday high of $17.83 before sliding back to $17.62, a net rise of just $0.07.

In the second line, New Silkroutes shares rose $0.045 to $0.73 on volume of 2 million, after it had dropped $0.085 on Tuesday, prompting a query from the Singapore Exchange (SGX).

The company that evening replied to SGX, saying although it is routinely in talks regarding fund-raising and various business deals, "no definitive agreement has been entered into in respect of any business opportunities, partnerships or joint ventures or fund-raising currently being considered..."

New Silkroutes also noted there were short sellers of its shares before a recent placement.

"Most of the sell orders have originated from Hong Kong and one from a securities firm in Singapore. However, the company is not aware of the identities of the seller(s), as no substantial shareholder has informed the company of any disposal of their shares," it said.

Elsewhere in the second line, shares of cleanroom firm Acromec, which plunged $0.10 on Tuesday to $0.475, ended unchanged on volume of 2.6 million. The company had replied to an SGX query saying it did not know of reasons for the loss.

Among the few broker reports to be issued was Maybank Kim Eng (MKE) on the offshore and marine sector, in which it said its view is still negative.

"We do not rule out more failures of weak players as banks turn more stringent in granting new and even extending existing credit. Access to bond and equity markets for capital is likely shut for most given the repercussions from the bond defaults seen in 2016," said MKE.

Morgan Stanley (MS) in its Asean Economics report about how the US reflation will impact Asean said it thinks the effect from better US growth and further US interest rate normalisation in 2016-17 is likely to lie somewhere in between what was the case in 2004, when the impact was benign for this region and 2013, when the impact was more muted.

"Indeed, the funding squeeze is unlikely to be as bad as in 2013, but the growth spillover is also unlikely to be as positive as in 2004," said MS.

ABN Amro in its Tuesday China Watch said it expects China's soft landing to continue in 2017-18.

"However, external risks (FX, capital flows, trade) have risen in a Trump world, adding to the already impressive list of macrofinancial (high and rising debt levels, bad loans, overcapacity, shadow banking, real estate bubbles) and geopolitical risks," said ABN Amro.

"Although we do not foresee a hard landing in our two-year forecast horizon, China's transition will remain risky and bumpy."

This article appears in The Business Times today. For full listings of SGX prices, go to http://btd.sg/BTmkts