Bulls and bears

Offshore and marine stocks slide further

Signs of calm in Chinese bourses fail to restore investors' confidence as oil prices fall

The jittery Chinese markets showed some signs of calm yesterday but local shares extended their losses as wary investors eyed tumbling energy prices.

Brent futures remained at around US$31.50 per barrel, triggering further sell-offs, particularly in the offshore and marine-related sectors in Singapore.

That left the benchmark Straits Times Index down 17.07 points or 0.63 per cent at 2,691.78, with 1.73 billion shares worth $923.1 million changing hands. The day ended with 20 STI constituent stocks in the red, led by Keppel Corp, which pared 39 cents or 7.04 per cent to $5.15. Keppel shares have dropped about 21 per cent so far this year.

Sembcorp Marine also stumbled, shedding 6.5 cents or 4.13 per cent to $1.51. The rig-builder, which has been in a contract dispute with Marco Polo Marine since November last year, may face further headwinds amid rumours that major Brazilian client Sete Brasil faces imminent bankruptcy.

"Sete Brasil projects account for 38 per cent of Keppel and SembMarine's outstanding order book. Profit reversal and impairment is inevitable in the event that Sete Brasil files for Chapter 11," DBS Group Research analysts warned in a note yesterday.

Smaller offshore and marine counters were also hammered. Ezra Holdings fell 0.6 cent or 7.06 per cent to 7.9 cents, while Ezion Holdings dropped 0.5 cent or 0.88 per cent to 56.5 cents.


ST GRAPHICS

The outlook for oil prices will be mixed in at least the short term, Bank of America Merrill Lynch noted recently as it cut its Brent average forecast for this year from US$50 previously to US$46 per barrel.

Meanwhile, banking plays continued to slide: United Overseas Bank dropped 21 cents or 1.15 per cent to $18.06; OCBC fell six cents or 0.72 per cent to $8.23; and DBS shed one cent or 0.07 per cent to $15.37.

On the other end of the ledger, Golden Agri-Resources was the top-gaining blue chip for the second day, rising 1.5 cents or 4.23 per cent to 37 cents. Talk that weather could impact palm oil production and bolster prices is lifting sentiment.

Among the telcos, Singtel put on one cent or 0.28 per cent to $3.53 while StarHub closed up four cents or 1.13 per cent at $3.58.

Some penny plays generated market buzz. Luzhou Bio-Chem Technology rose one cent or 22.73 per cent to 5.4 cents and LionGold Corp gained 0.1 cent or 20 per cent to 0.6 cent following a flurry of shareholding changes.

The mixed performance in Singapore came as the region tried to regain its breath after the recent free fall. Shanghai eked out a 0.2 per cent gain, with investors encouraged by further stabilisation in the Chinese yuan.

But most other markets remained spooked. Hong Kong closed down 0.89 per cent, Tokyo dropped 2.71 per cent and Sydney pared 0.17 per cent.

A version of this article appeared in the print edition of The Straits Times on January 13, 2016, with the headline 'Offshore and marine stocks slide further'. Print Edition | Subscribe