Bulls And Bears

Mixed day in Asia as US hints at rate hike

S'pore and Shanghai record losses, but Tokyo and HK bourses rose marginally

Asian markets had a mixed day with investors again on edge over expectations that United States interest rates are about to go up again.

Federal Reserve officials have been hinting over the past week of a possible September hike as the country's growth outlook firms up.

Fed chairman Janet Yellen is expected to speak later this week, prompting investors to batten down the hatches.

Singapore's benchmark Straits Times Index took the cue from Wall Street's decline last Friday and closed down 2.83 points or 0.10 per cent at 2,841.19, on only $586.3 million worth of shares traded.

Shanghai was off 0.75 per cent, due also to profit-taking, while Hong Kong added 0.26 per cent on a slow day. Japan's Nikkei rose 0.32 per cent after the yen weakened against the greenback.

Of the 30 STI component stocks, 13 ended in the red yesterday, with StarHub leading the losers down 10 cents or 2.60 per cent at $3.75. Singtel ended flat at $4.19, while M1, which is outside the STI, dropped one cent or 0.37 per cent to $2.71.

DBS analyst Sachin Mittal downgraded his call on both StarHub and M1 to hold yesterday. This followed StarHub's move last week to launch aggressive new broadband plans that come with a 10 per cent drop in average revenue per user, compared with the telco's overall average.

Mr Mittal read the move as a response to the likely emergence of a fourth operator in the spectrum auction to be held around October.

"Our checks indicate that MyRepublic is still keen to bid for the spectrum. Despite a weak business case for the new entrant, one cannot rule out cash-rich investors willing to establish a footprint in Singapore," he noted.

"We believe investors will be better off buying local telco stocks if a new player is ruled out in October, or accumulating them on weakness if a new player enters."

Developer City Developments pared 15 cents or 1.72 per cent to $8.58, while CapitaLand was off one cent or 0.32 per cent to $3.08. CapitaLand Commercial Trust also ended lower, dropping one cent or 0.64 per cent to $1.56.

CapitaLand Retail China Trust added one cent or 0.63 per cent to $1.61 on news that it has agreed to acquire a Chengdu mall for 1.5 billion yuan (S$305 million), which will be the trust's 11th mall in China.

Keppel Corp added seven cents or 1.32 per cent to $5.37, leading the nine STI gainers yesterday. Sembcorp Marine was also up, rising half a cent or 0.38 per cent to $1.33.

The rig builders were lifted after Brent futures hit US$50 last Thursday but the rally may prove short-lived, with prices dropping towards US$49 a barrel late yesterday.

CNMC Goldmine rose 4.5 cents or 8.65 per cent yesterday to 56.5 cents. The shares have gained 7.6 per cent since the gold miner reported on Aug 10 that its second-quarter net profit surged 30.9 per cent to US$4.7 million (S$6.4 million).

A version of this article appeared in the print edition of The Straits Times on August 23, 2016, with the headline 'Mixed day in Asia as US hints at rate hike'. Print Edition | Subscribe