Bulls And Bears

Asian markets fall on interest rate hike concerns

STI dips as MAS tells BSI, which is linked to 1MDB scandal, to close down S'pore branch

Asian markets slipped into the red yesterday as concerns over the impending interest rate hikes in the United States and dipping oil prices returned into focus.

The local Straits Times Index (STI) eased 0.6 per cent, or 16.7 points, to 2,750.23. This came as the Monetary Authority of Singapore told BSI Bank - which has been embroiled in a global money-laundering scandal surrounding Malaysia's state fund 1MDB - to shut down its Singapore branch over "serious breaches of anti-money laundering requirements".

The downbeat sentiment here was not unlike that on Wall Street, which shed 0.05 per cent overnight ahead of a number of key economic data due out this week.

Comments from US Federal Reserve officials also fuelled speculation that an interest rate hike could come on as soon as June. St Louis Fed Reserve president James Bullard said that holding rates too low for too long could cause financial instability.

Elsewhere in Asia, Tokyo fell 0.94 per cent amid a strengthening yen, while Shanghai lost 0.77 per cent and Sydney slid 0.44 per cent.

Hong Kong bucked the trend, climbing 0.11 per cent, reversing its losses in late trading.

"It's the uncertainty that is bearing down on sentiments... some people are wondering if they should stay as liquid as possible," said a trader in a NetResearch Asia note.

Of the 30 STI constituents, 22 racked up losses, with palm oil giant Golden Agri-Resources one of the biggest laggards, falling one cent or 2.7 per cent to 36.5 cents.

Rigbuilder Sembcorp Marine was also a drag on the index's performance, sliding 3.5 cents or 2.2 per cent to $1.54, while parent company Sembcorp Industries shed three cents or 1.1 per cent to $2.74.

Keppel Corporation dropped seven cents or 1.3 per cent to $5.23.

This came as crude prices dipped lower for the fifth straight day on worries over the supply glut, after Iran reiterated it will keep up with production levels.

On the other side of the ledger, Thai Beverage rose strongly by three cents or 3.5 per cent to 89 cents. Religare analyst Nirgunan Tiruchelvam raised his target price for the stock from 76 cents to $1.10, citing a "high probability" that Fraser & Neave could be fully integrated under ThaiBev as TCC, the parent of both companies, looks at restructuring its holdings.

CapitaLand Commercial Trust added one cent or 0.7 per cent to $1.385. The trust said on Monday that it is acquiring the remaining 60 per cent of the CapitaGreen office building for about $393 million.

The day's most heavily traded counter was property development and investment company Cedar Strategic Holdings, which slumped 0.1 cent or 25 per cent to 0.3 cent on 77.5 million shares traded. Turnover across the bourse was thin, with just 966.2 million shares worth $726.7 million changing hands.

A version of this article appeared in the print edition of The Straits Times on May 25, 2016, with the headline 'Asian markets fall on interest rate hike concerns'. Print Edition | Subscribe