Bulls And Bears

Limited turnover as oil and gas woes loom

STI ends lower with investors likely mulling over cuts inflicted on economy and corporates

Asian markets had another mixed session, with Singapore shares ending lower on limited turnover.

Shanghai stood out as a top regional performer despite trading sideways most of the day and adding only 0.21 per cent. Hong Kong was closed because of a typhoon.

Tokyo was down by 0.3 per cent, and Sydney pared 0.22 per cent.

Singapore's benchmark Straits Times Index (STI) closed 11.56 points or 0.41 per cent lower at 2,831.06 yesterday, as the whole local market saw only 1.51 billion shares worth $680 million change hands. The STI ended the week 0.56 per cent higher but volume plunged 31.24 per cent.

Global markets learnt overnight that the European Central Bank has decided to maintain its quantitative easing programme as expected.

Meanwhile, oil prices managed to hold above US$51 a barrel despite a slight strengthening of the greenback. But investors here were likely pondering the deep cuts that the Singapore economy and corporates have suffered, after news on Thursday that Keppel Corp's profit had dropped 38.1 per cent in the three months to Sept 30, with around 3,080 jobs axed in the period.

CMC Markets analyst Margaret Yang said: "The prolonged commodity downturn, especially the low oil price environment, has hurt many aspects of Singapore's economy. The pain has been reflected in corporate earnings and... layoff plans.

"Rising concerns about bonds defaulting and non-performing loans will further dampen market confidence in the near term."

Unsurprisingly, Keppel Corp was one of the 18 STI component stocks that ended in the red. Its shares closed 13 cents or 2.39 per cent lower at $5.31. Other marine and offshore counters were not spared. Ezra Holdings dropped 0.1 cent or 2 per cent to 4.9 cents and Sembcorp Marine slid one cent or 0.74 per cent to $1.335.

PEC ended flat at 63.5 cents. The oil and gas engineering firm is seemingly the only bullish play in the sector now, having added some 35 per cent since the end of August. Its price-to-earnings ratio of 8.65 and a dividend yield of 3.12 per cent may entice some bargain hunters.

Back on the STI, Ascendas Real Estate Investment Trust (Reit) pared three cents or 1.23 per cent to $2.40. On Thursday, the Reit reported a 3.1 per cent year-on-year drop in distribution per unit (DPU) for the second quarter. OCBC analyst Andy Wong raised his fair-value estimate for Ascendas Reit to $2.67, adding in a note yesterday: "Ascendas Reit still offers investors an attractive distribution yield of 6.4 per cent for financial year 2017 and 2018."

CapitaLand Mall Trust shed one cent or 0.47 per cent to $2.11, ahead of announcing a DPU of 2.78 cents for the three months to Sept 30.

On the other end of the STI, seven counters rose, led by Yangzijiang Shipbuilding, which put on half a cent or 0.68 per cent to 74 cents, with 12.7 million shares traded.

A version of this article appeared in the print edition of The Straits Times on October 22, 2016, with the headline 'Limited turnover as oil and gas woes loom'. Print Edition | Subscribe