Asian shares were sold down yesterday as the strong US dollar sucked capital out of regional markets, a trend that some analysts suspect may continue.
In the wake of last week's rate hike and spurred on by US President-elect Donald Trump's economic proposals, the greenback has risen to above 1.449 against the Singdollar while sitting at about 6.95 to the yuan - both at or near the 12-month highs.
A strong US dollar usually attracts fund flows from Asia back to US assets. This happened yesterday, with Shanghai down 0.16 per cent and Hong Kong slipping 0.85 per cent. Tokyo eased 0.05 per cent.
Singapore's benchmark Straits Times Index (STI) closed 24.78 points or 0.84 per cent lower at 2,913.08. Overall turnover was a lacklustre 969.5 million shares worth just $816.2 million, as a typical year-end lull also kicked in.
"I think the US dollar run may continue at least for the mid term. Aside from the impact on the foreign exchange markets, how the equities markets will fare will also depend on fundamentals and valuations," CMC Markets analyst Margaret Yang said.
"There is likely further profit- taking ahead. The current support level for STI is at 2,900."
Of the STI stocks, 22 ended in the red, with UOL Group losing 15 cents or 2.39 per cent to $6.12. Jardine Matheson Holdings pared US$1.05 or 1.91 per cent to US$54.
Genting Singapore fell for the third straight session, off 1.5 cents or 1.59 per cent to 93 cents on 22.9 million shares traded. The gaming stock has drawn opposing views on its outlook, with some excited over Genting's chance to enter the newly legalised casino market in Japan. But OCBC analyst Deborah Ong has kept her sell rating and a fair value of 75 cents.
"While there are many reasons for selling one's holdings, we note that chief operating officer (Tan Hee Teck) disposed of 10 million of his 12 million shares on Nov 28 and 29 for proceeds of $9.6 million, suggesting an insider may deem 96 cents a favourable price to divest," she said in a recent note.
Meanwhile, six STI stocks managed to rise in the slow session. Jardine Cycle & Carriage added 83 cents or 2.08 per cent to $40.70. Golden Agri-Resources put on half a cent or 1.18 per cent to 43 cents.
Sembcorp Industries rose one cent or 0.34 per cent to $2.92, and Keppel Corp was flat at $6 as Brent futures held steady at about US$55 a barrel.
Among smaller caps, Spackman Entertainment Group rose 0.4 cent or 2.14 per cent to 19.1 cents on 110.6 million shares traded. The film company's shares have been gaining strongly since Dec 5, drawing queries on unusual volume from the Singapore Exchange on Dec 12.
Spackman said it was unaware of any reasons, but mentioned talks that may or may not lead to the sale of shares in associated firm Spackman Media Group.