Bulls and bears

Brexit fears, drop in oil prices haunt STI

Commodity trader Noble Group the most active after trading of its rights began

Local shares eased yesterday as investors took profit in the light of weaker European futures and oil dropping below US$50 a barrel.

The Straits Times Index headed into the public holiday today down 0.21 per cent or 5.89 points to 2,864.67.

Brexit fears resurfaced with European banks slumping on health concerns and sending European markets lower at the opening.

Losses in CapitaLand, StarHub, ComfortDelGro, Golden Agri-Resources and Sembcorp Marine weighed on the index. CapitaLand lost nearly 2 per cent or six cents to $2.99 and StarHub dipped 1.3 per cent or five cents to $3.75.

Weaker commodity prices weighed on Golden Agri-Resources, which shed 1.4 per cent or 0.5 cent to 36 cents, while Sembcorp Marine lost 1.3 per cent or two cents to $1.56.

ComfortDelGro shed 1.4 per cent or four cents to $2.80. UOB Kay Hian maintained a buy call on the defensive counter, saying Brexit will not have significantly hit its British operations, which account for about 25 per cent of group revenue.

"Given that the bulk of its earnings stems from the more resilient bus segment, we have retained the view that downside impact is limited. We continue to favour the company for its resilient outlook, strong cash-flow generation and steady dividends."

UOB dipped 0.3 per cent or six cents to $18.48, after RHB Securities maintained a neutral call on the bank, citing higher-than-expected impairment charges and weaker-than-expected net interest margins and non-interest income.

"Expected slower economic growth, which will be worsened by Brexit, has led us to cut UOB's 2016 loan growth assumption to 0.5 per cent from 3 per cent," the broker said.

Noble Group was the most active after trading of its rights began yesterday. The commodity trader jumped 9 per cent or 1.7 cents to 20.5 cents, with 164.4 million shares changing hands.

"Some investors may be buying into the rights issue to subscribe for the company's shares later," said Mr Sean Lim, a Maybank Kim Eng trading representative.

Other hotly traded counters included Vallianz, which jumped 5.4 per cent or 0.2 cent to 3.9 cents, with 60.6 million shares traded, and KLW, up 12.5 per cent or 0.1 cent to 0.9 cent on trade of 44.4 million shares.

CNMC Goldmine jumped 7.1 per cent or 3.5 cents to 52.5 cents with 36.7 million shares traded.

Manulife US Reit gained 4.2 per cent or 3.5 US cents to 86 US cents after DBS Group Research initiated coverage with a buy call.

DBS said Manulife Reit offers investors an opportunity to invest in freehold properties in the United States, "where the real estate market outlook is favourable and the economy is recovering".

A version of this article appeared in the print edition of The Straits Times on July 06, 2016, with the headline 'Brexit fears, drop in oil prices haunt STI'. Print Edition | Subscribe