STI falls on Fed fears, trade tensions

Telco woes and Indian bourse wrangle also hit sentiment; losers outnumber gainers two to one

The Singapore bourse was awash in red yesterday, with markets jittery ahead of the US Federal Reserve's meeting minutes release.

The benchmark Straits Times Index plunged below the 3,500 mark, losing 46.91 points, or 1.32 per cent, to 3,496.27. Losers trounced gainers 307 to 156 overall, or two down for every one up, with 1.36 billion shares traded for a value of $1.33 billion.

The Fed minutes, due at 2am today (Singapore time), will be scrutinised for clues to US policymakers' thinking on interest rate changes.

On the Singapore front, ANZ economists Sanjay Mathur and Eugenia Fabon Victorino wrote: "At this point, core inflation has averaged 1.5 per cent year-on-year in the year to date. Henceforth, wages and domestic demand by implication will need to accelerate substantially to generate robust price pressures and justify further tightening by the Monetary Authority of Singapore in October."

The hope from last week's US-China trade talks is fast burning out. US President Donald Trump seemed to contradict an official's earlier statement that a trade war is "on hold", telling media he was "not satisfied" with the state of affairs.

Wall Street saw indices dipping overnight, and IG Asia market strategist Pan Jingyi said in a morning note that "the soiled risk sentiment points to synchronised declines" in Asia too.

Shanghai fell by 1.41 per cent and Tokyo by 1.18 per cent, while Hong Kong lost 1.82 per cent. At home, Singtel dragged down the index, slipping by $0.06, or 1.77 per cent, to $3.34, with 47.8 million shares changing hands. StarHub, another index telco, sank by $0.06, or 2.79 per cent, to $2.09.

"Our sensitivity analysis suggests that every 1 per cent change in wireless revenue could affect their core profits and target prices by 1 per cent to 3 per cent.

Maybank Kim Eng analyst Luis Hilado, writing after a mobile virtual network operator offered a zero-dollar data plan

Maybank Kim Eng analyst Luis Hilado wrote, in the wake of a mobile virtual network operator's new zero-dollar mobile data plan: "Our sensitivity analysis suggests that every 1 per cent change in wireless revenue could affect their core profits and target prices by 1 per cent to 3 per cent."

Mr Hilado, who has a "hold" call on all three listed telcos, added: "Remain neutral on the sector as current prices reflect our forecast of gradual incumbents' revenue erosion of 3 per cent per annum over FY2018 to FY2020."

Casino operator Genting Singapore lost $0.04, or 3.05 per cent, to $1.27, on a churn of 37.6 million shares.

Singapore Exchange (SGX) shed $0.09, or 1.2 per cent, to $7.39, amid a legal tussle between the bourse operator and its Indian counterpart over planned India equity derivatives. All eyes are on the Bombay High Court's coming decision.

Citic Envirotech earned a trading query from SGX over "unusual volume movements" in its shares. The China-based engineering company lost $0.07, or 10.29 per cent, to $0.61, on 6.79 million shares.

Founder Lin Yucheng announced his resignation as chief executive on Tuesday night.

The company called a trading halt at about 3pm, and said after the close that it had learnt that Dr Lin and chief operating officer Pan Shuhong are in talks to sell their shares to the parent Citic Environment (International) Company.

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