Bulls and Bears

STI falls ahead of Trump-Xi summit

Investors watching key event for possible comments about trade and exchange rates

Singapore equities continued to roll downhill yesterday ahead of an important meeting between US President Donald Trump and his Chinese counterpart Xi Jinping.

The two leaders are set to hold a summit in Florida at the end of this week which will be watched by markets for any comments about trade and exchange rates.

The benchmark Straits Times Index (STI) pared 2.51 points or 0.08 per cent to 3,176.55, with 1.95 billion shares worth $1.12 billion changing hands across the bourse.

But other markets in Asia mostly finished higher as traders shrugged off news that North Korea had fired a medium-range ballistic missile.

Shanghai rose 1.48 per cent as trading resumed, after a two-day break, on optimism over plans for a new economic zone near Beijing.

Hong Kong gained 0.57 per cent, Tokyo put on 0.27 per cent, and Sydney added 0.34 per cent. Wall Street rose 0.19 per cent overnight.

At home, Golden Agri-Resources continued to be a major drag on the STI, falling 1.3 per cent or half a cent to 37.5 cents. On the other side of the ledger, Yangzijiang Shipbuilding gained 1.3 per cent or 1.5 cents to $1.16 while Wilmar International put on 1.1 per cent or four cents to $3.56.

Telcos were in focus after Tuesday's general spectrum auction, which drew a record bid of $1.14 billion from Singtel, StarHub, M1 and newcomer TPG Telecom. Singtel was flat at $3.92 while StarHub eased 0.7 per cent or two cents to $2.86. M1 was the biggest loser, retreating 1.9 per cent or four cents to $2.12.

The outlook for the sector remains mixed amid heated competition and rising demand for service quality, with analysts expecting pricing pressure and even slashed dividends in the quarters ahead.

"There's more downside than upside for StarHub and M1, which are fully dependent on domestic revenue. This means their earnings will be under pressure, which may potentially translate to lower dividends in the years ahead. StarHub has already guided for lower dividends this year, and we expect M1 to lower theirs from last year as well," said OCBC Investment Research analyst Eugene Chua.

Outside of the STI, both IEV Holdings and Lorenzo International had trading queries from the Singapore Exchange in the afternoon.

IEV, which shot up 18.6 per cent or 1.6 cents to 10.2 cents, said it was not aware of any possible explanation for the unusual activity except for a March 7 announcement saying it has commenced discussions with various parties over a possible fund-raising exercise for the group's development plans.

Lorenzo surged 10 per cent or half a cent to 5.5 cents. It also said it was not aware of any possible reasons behind the trading.

Commodity trader Noble Group was the most active stock, falling 2.1 per cent or 0.4 cent to 18.9 cents on 90.5 million shares done. Loyz Energy was also hotly traded, jumping 4.2 per cent or 0.1 cent to 2.5 cents.

A version of this article appeared in the print edition of The Straits Times on April 06, 2017, with the headline 'STI falls ahead of Trump-Xi summit'. Print Edition | Subscribe