Business

STI slips 0.1% as SIA continues descent

The decline in the blue chip-dominated index did not reflect a slightly better day for most stocks

Singapore stocks failed to hold on to midday gains yesterday, with the Straits Times Index slipping 0.1 per cent, or 3.35 points, to close the day at 3,213.57.

The decline in the blue chip-dominated index, however, did not reflect a slightly better day for most stocks. Gainers just edged out losers 225 to 214.

A total of 2 billion shares worth $1.13 billion changed hands, representing an average turnover of 55.4 Singapore cents per trade. Yesterday's traded volume was about 82 per cent of the daily average of 2.5 billion shares over the first four months of the year. The turnover was 93 per cent of the first four months' daily average of $1.2 billion.

The Singapore stock market bucked a regional rally to open marginally lower, but soon caught up by the afternoon, gaining by as much as 5.5 points, or 0.2 per cent, at 2pm.

Singapore Airlines (SIA) remained a notable drag on the index, coming on the back of a disappointing loss for the quarter ended March.

Its shares slipped 1.9 per cent, or 19 Singapore cents, to close at $9.79.

"It's not very heavily weighted in the index, but when it goes down a few per cent, that has an impact," IG market strategist Pan Jingyi said.

Analysts are expecting more turbulence ahead for Singapore's national carrier, with many cutting their target price for the stock following the latest set of results.

UOB Kay Hian lowered its target price for SIA to $10 from $10.10, noting that SIA chief executive Goh Choon Phong had not offered much details when discussing transformation plans with analysts.

"Our sense is that SIA is still exploring options and does not have a concrete strategy to stem losses as yet," UOB Kay Hian wrote.

OCBC Investment Research cut its target price to $10.03 from $10.36 yesterday, saying that "the worst may not be over for SIA as we continue to expect yield erosion to persist on overcapacity and sustained low oil price environment".

The news was more positive in other sectors.

Oil prices rallied on expectations that the Organisation of the Petroleum Exporting Countries (Opec) will extend supply cuts at a meeting on Thursday.

Rigbuilders Keppel Corp and Sembcorp Marine rallied, with Keppel adding 1.4 per cent, or nine Singapore cents, to head out at $6.56, while Sembcorp Marine gained 1.8 per cent, or three Singapore cents, to close at $1.74.

The question before Thursday's Opec meeting is less whether existing cuts will remain, or whether there will be additional reductions.

"We are somewhat sceptical that any more cuts can be on the agenda though, if only because of time constraints involved in thrashing out the details before Thursday," Oanda senior market analyst Jeffrey Halley said.

"Having said that the market had discounted all hope of Opec and non-Opec coming together to produce the cuts in January so maybe it is a case of where there is smoke, there is an oil fire."

US political uncertainty also took a back seat yesterday, with US President Donald Trump visiting the Middle East.

The previous week had ended with a whirlwind of reports about the circumstances surrounding Mr Trump's dimissal of former Federal Bureau of Investigation chief James Comey and possible connections between Russia and members of his campaign and Cabinet.

Markets were keen to take a breather yesterday, IG's Ms Pan said.

"Trump is away this week, and we're shifting to economic data with Q1 GDP and FOMC (Federal Open Market Committee) minutes," she said.

"The next pivotal point will be the testimony from Comey, but that's only due after Memorial Day (May 29)."

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