Bulls And Bears

STI dips as investors keep to sidelines

Cautious sentiment as markets keep eye on US presidential debate, await ECB decisions

Singapore shares snapped a four- day winning streak to record a small fall in a slow session as investors watched several key market events from the sidelines.

The third United States presidential debate was closely watched by markets worldwide to see if divisive Republican nominee Donald Trump could turn the tide of the election campaign in his favour.

Across the Atlantic, the European Central Bank was due to table its post-meeting monetary policy decisions after Asian market hours. The regional benchmark FTSEurofirst 300 was volatile ahead of the announcement, as some worried that the ECB may soon taper its quantitative easing (QE) programme.

ABN Amro believes the ECB will keep its policy on hold at the meeting and move to extend the QE programme at the December meeting.

These market uncertainties weighed on local sentiment. The benchmark Straits Times Index closed two points or 0.07 per cent lower at 2,842.62.

Overall volume stayed weak, with 1.54 billion shares worth $801 million traded across the market.

The biggest loser among the 14 STI constituents ending in the red was Yangzijiang Shipbuilding, off one cent or 1.34 per cent to 73.5 cents. Jardine Matheson slid 68 US cents or 1.1 per cent to US$61.

Telcos Singtel and StarHub were both down, with Singtel off four cents or 1.02 per cent to $3.90 while StarHub pared two cents or 0.59 per cent to $3.37. The two will announce quarterly results in coming weeks but the sector's outlook seems uncertain after M1 unveiled a 23.4 per cent fall in third-quarter profit earlier this week.

It remains unclear when exactly the upcoming spectrum auction will be held to allow entry of the fourth telco, but when it happens, market share competition, price-cutting and stress on earnings are all to be expected.

M1, which dropped two cents or 0.9 per cent to $2.19, stands to lose the most, owing to its focus on the domestic market and mobile business, Maybank analyst Gregory Yap said, giving M1 a "sell" call and a $1.90 12-month target price.

In all, 12 STI constituents ended higher. CapitaLand Commercial Trust was the top gainer, up 2.5 cents or 1.59 per cent to $1.60 on 10 million shares traded. CCT reported a 7.5 per cent rise in distribution per unit to 2.3 cents on Wednesday.

Keppel Corp added two cents or 0.37 per cent to $5.44, before reporting a 38 per cent slump in third-quarter earnings.

Ezra Holdings, also under scrutiny amid oil price woes, shed 0.1 cent or 1.96 per cent to five cents, with 24.5 million shares changing hands.

The key healthcare plays remained stable amid the volatility. Singapore Medical Group added three cents or 6.67 per cent to 48 cents and Raffles Medical Group closed up half a cent or 0.33 per cent at $1.52.

A version of this article appeared in the print edition of The Straits Times on October 21, 2016, with the headline 'STI dips as investors keep to sidelines'. Print Edition | Subscribe