Bulls And Bears

Asian shares down on weak sentiment

Regional markets do badly as concerns over China, global economic weakness persist

Pessimism about the region's economic prospects sent shares down again yesterday and into bear territory.

The sell-off left the Straits Times Index (STI) down 40.7 points, or 1.44 per cent, to 2,791.9.

Regional markets also performed poorly: Japan's Nikkei fell 1.32 per cent, Kuala Lumpur dropped 0.41 per cent and the Jakarta Composite Index retreated 2.11 per cent.

Singtel was one of the bigger losers here, down 12 cents or 3.30 per cent to $3.52.

This may have been because investors have been anticipating that the Infocomm Development Authority would soon announce the start of bidding for the fourth telco licence, which could lead to more competition in the sector, remisier Alvin Yong said.

The expectation that competition in the sector would increase was weighing on the sentiment of telco stocks, he added.

Commodity stocks were broadly down as well. Noble Group slipped one cent or 2.2 per cent to 44.5 cents, Wilmar was down 1.52 per cent or four cents to $2.60 and Golden Agri lost 0.5 cent or 1.59 per cent to 31 cents.

Outside the STI, Ezra fell 0.5 cent or 4.1 per cent to 11.6 cents while Ezion lost four cents or 5.71 per cent to 66 cents.

The global economic weakness was weighing on oil and commodity prices and this has affected these stocks, Mr Yong said.

"As long as general commodity prices remain weak, we don't expect a strong rebound on commodity counters. The share prices of commodity counters are likely to remain weak for some time."

Unless China implements more monetary stimulus or the European Central Bank or Bank of Japan expanded their quantitative easing programmes, there would not be much reason for optimism, he added.

Wilmar and Golden Agri could also have been hit by concerns that they may face legal and compliance costs if their farming practices are found to be unsustainable in the light of the haze, he said.

The three Singapore banks were also down, perhaps because investors are selling to hold onto cash because of the global uncertainty, Mr Yong said.

UOB lost 24 cents or 1.28 per cent to $18.57, DBS slipped 19 cents or 1.13 per cent to $16.58 and OCBC pared 18 cents or 2.02 per cent to $8.73.

The top gainer was Sats, up 12 cents or 3.05 per cent to $4.05.

The outlook for the firm, which services the aviation sector, is perceived to be better than its rivals. Some expect lower oil prices to aid airlines, which would in turn benefit firms that support them.

Investors whose portfolios are structured to reflect the stock weightage of the STI could also be picking up the stock due to its recent inclusion in the index, said Mr Yong.

A version of this article appeared in the print edition of The Straits Times on September 29, 2015, with the headline 'Asian shares down on weak sentiment'. Print Edition | Subscribe