Business

STI sheds 1.5% on debt ceiling worries

Yesterday's late push does little to reduce its 49-point deficit for the week

North Korea's nuclear test on Sunday brought the sellers out in the early part of the week, though prices stabilised when it appeared that the US response would be mainly through diplomatic channels.

Here, trading was muted for the most part, though with sporadic bursts of interest. Yesterday, for example, a flurry of very late trades in the shares of prefabricated steel firm BRC Asia saw the stock finish $0.04, or 4.9 per cent higher, at $0.86 on volume of 84.6 million.

Market watchers speculated that the interest could be the prelude to a major announcement, possibly a takeover.

After nerves settled over North Korea, however, markets soon had to worry about whether the US government's debt ceiling would be raised before the end of the month or whether there would be a government shutdown leading to a default on its debt obligations.

As a result, the Straits Times Index spent most of the week locked within a narrow band after a Monday selloff.

Yesterday, despite an 80-point plunge in the Dow futures, the STI enjoyed a late push that saw it record a net gain of half a point at 3,228.56, though that did little to reduce its 49-point or 1.5 per cent loss for the week.

Yesterday, despite an 80-point plunge in the Dow futures, the STI enjoyed a late push.

As it turned out, US President Donald Trump stunned his fellow Republicans on Wednesday when he struck a deal with the Democrats to raise the federal debt limit and fund the government through Dec 8.

The legislation included US$15.25 billion (S$20 billion) in aid for areas affected by Hurricane Harvey and other natural disasters.

However, the bill now goes to the House for final congressional approval, where it faces opposition from conservatives who favour raising the ceiling while also cutting spending.

Whether or not it receives the nod from Congress, Wall Street took the news well, with stocks stabilising in midweek.

Turnover here picked up as the week wore on - yesterday, 1.7 billion units worth $1.2 billion were traded, the third successive day that dollar business rose above $1 billion. Excluding warrants, there were 232 rises versus 208 falls.

Banks have been the main index drivers and so it was again this week.

BLUE CHIPS

Other blue chips in play were Singtel, Genting Singapore and CapitaLand, the latter slipping $0.01 yesterday to $3.70 on a volume of 9.2 million.

On Wednesday, CapitaLand announced that it was investing $300 million in Indonesia, in an integrated development to be named The Stature Jakarta and a 192-unit serviced residence, Ascott Sudirman Jakarta, through its wholly owned serviced residence business unit, The Ascott Limited.

OCBC Investment Research maintained its "buy" on CapitaLand with an unchanged fair value of $4.13.

Diversified real estate firm Rowsley Holdings, which is controlled by businessman Peter Lim, regularly topped the actives list and has remained supported by a July announcement that it will receive a large injection of healthcare assets. Yesterday, Rowsley dipped $0.003 to $0.112 with 71.1 million shares done.

Yangzijiang Shipbuilding shares have been among the market's best performers this year but have come under pressure in recent weeks after the company announced a 137 million share placement at S$1.53 each. Yesterday, YZJ ended $0.005 higher at $1.41 on turnover of 24.2 million.

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

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