Bulls and bears

Local shares down again as rally falters

Traders lock in gains as sell-off deepens in emerging markets and global bonds

Singapore equities slid back into the red yesterday amid a deepening sell-off in emerging markets and global bonds.

The benchmark Straits Times Index (STI) retreated 19.49 points or 0.69 per cent to 2,814.6, even though it was still up 25.8 points or 0.93 per cent for the week.

About 1.82 billion shares worth $1.85 billion changed hands.

Traders are worried about United States President-elect Donald Trump's possibly expansionary policies, which could lead to major capital outflows from emerging markets.

"The broad rally that erupted (on Thursday) began to wane as traders locked in gains and eased on taking positions ahead of the weekend," noted a NetResearch Asia report.

"Traders were also taking note of the climb in US bond yields as expectations of inflation grew with Trump's proposal to improve and build infrastructure."

In line with higher bond yields, Singapore real estate investment trusts (Reits) mostly finished weaker. CapitaLand Mall Trust fell 5.5 cents or 2.8 per cent to $1.945, while Ascendas Reit dropped five cents or 2.2 per cent to $2.25.


ST GRAPHICS

Other losers included Singtel, which slipped seven cents or 1.8 per cent to $3.77. Yangzijiang Shipbuilding fell five cents or 6.1 per cent to 77 cents, while Singapore Airlines was down 20 cents or 2 per cent at $9.77.

But DBS Group Holdings helped to prop up the STI, rising strongly by 44 cents or 2.8 per cent to $16.13 in heavy trade.

Sats gained five cents or 1.1 per cent to reach $4.79. The ground-handling firm has raised its interim dividend to six cents a share, having seen second-quarter earnings grow 4 per cent to $62.1 million.

Oilfield services firm Ezion Holdings, which reported a 69.1 per cent drop in third-quarter earnings to US$9.4 million (S$13.3 million), saw its stock sink one cent or 3 per cent to 32 cents.

KGI Securities has downgraded the counter from "hold" to "sell", with a target price of 20 cents, citing the firm's weak fundamentals and high valuation compared with those of its global peers.

The most active stock was again Noble Group, which fell one cent or 4.9 per cent to 19.5 cents, with 410.4 million shares traded. The commodity trader on Thursday posted a net loss of US$28.1 million for the three months to Sept 30, a reversal from the net profit of US$24.7 million achieved a year earlier.

DBS Group Research kept its "hold" rating for Noble, with a target price of 20 cents, noting the group was "not out of the woods yet".

"While Noble has strengthened its balance sheet with the sale of Noble Americas Energy Solutions for US$1.05 billion, it will take time to restore confidence in the business model," said DBS Group Research.

It noted Noble is "still generating negative operating cash flows and having volatile profitability" and "various credit agencies have placed Noble on a negative outlook".

A version of this article appeared in the print edition of The Straits Times on November 12, 2016, with the headline 'Local shares down again as rally falters'. Print Edition | Subscribe