STI mirrors regional weakness

Singapore shares ended lower yesterday even as China powered ahead as it resumed trading after a week-long Chinese New Year hiatus.

Mainland China reopened yesterday, with the CSI 300 Index - which tracks the large caps listed in Shanghai and Shenzhen - closing 2.2 per cent higher, its biggest gain since August 2016.

The Shanghai Composite was up 69.40 points, or 2.17 per cent, at 3,268.56.

Elsewhere, Asian equity markets were mostly in the red after taking their cue from the overnight decline of 0.67 per cent in the Dow Jones Industrial Average, which ended at 24,797.78.

The Hang Seng Index lost 1.48 per cent to close at 30,965.68, while Japan's Nikkei shed 1.07 per cent to settle at 21,736.44.

The Dow erased sharp gains, after interest rates reached fresh multi-year highs following the release of the latest Federal Reserve minutes.

Mr Rob Carnell, chief economist and head of research, Asia-Pacific at ING, said: "Recent Fed minutes indicate that there will almost certainly be a hike at the March meeting. Chairman Powell may need to add some aggressive testimony to stamp his hawkish credentials.''

Mr Jerome Powell succeeded Ms Janet Yellen as the US Federal Reserve's new chair and is expected to follow Ms Yellen's strategy of gradual rate hikes.

"While little is clear in financial markets, one thing that does seem crystal clear today is that currently, stocks are not sufficiently weak for the Fed to hold off from hiking in March.

"The S&P 500 is still more than 1 per cent higher than it was at the start of the year. Unless such markets are in disorderly retreat, this view is unlikely to change," Mr Carnell added.

In Singapore, the benchmark Straits Times Index (STI) also mirrored regional weakness.

OPENING

After opening at 3,503.09, it ended at 3,488.46, down 27.77 points, or 0.79 per cent. About 1.8 billion shares, worth $1.7 billion, changed hands. There were 121 gainers to 331 losers.

Ms Pan Jingyi, market strategist at IG, sees immediate support for the STI at 3,462, the 38.2 per cent Fibonacci retracement level prior to the 3,400 level.

Sembcorp Marine took a huge beating, following its shocking release of $33.8 million losses for the fourth quarter in FY2017, compared with a net profit of $34.3 million a year ago.

For FY17, earnings came in at $14.1 million, plunging 82.1 per cent from $78.8 million in FY16. The stock ended at S$2.33, down 30 cents, or a staggering 11.4 per cent, on more than 52 million shares changing hands.

Interestingly, most analysts are keeping their "buy" calls on the offshore marine group, citing higher-than-expected order wins and a possible corporate action by parent Sembcorp Industries.

Ms Low Pei Han, analyst at OCBC, said all eyes would be on Sembcorp Industries when it announces results today as the market looks for an update on the group's ongoing strategic review.

Speculation has been rife that Sembcorp Industries may be looking to divest or privatise Sembcorp Marine.

Among the local banks, OCBC Bank bucked the trend to end at $13.10, up 10 cents, or 0.77 per cent. DBS Bank and United Overseas Bank both closed lower.

In his report, Mr Eli Lee, head of investment strategy at Bank of Singapore, said the long-term outlook for equities remains positive.

"We have an overweight rating on European equities, which are supported by solid EU growth and an overall rotation towards relative value. Rising bond yields will also benefit the European banking sector which is a significant component of the European market," Mr Lee said.

For full listings of SGX prices, go to http://btd.sg/BTmkts