Bulls and bears

STI joins most of Asia in weak showing

It slides 0.89% in thin trading; only Jardine Matheson up out of 30 constituent stocks

The local bourse endured yet another dour day with most blue chip counters sold down amid mixed signals over the economic outlook and volatile commodity prices.

Singapore's benchmark Straits Times Index slid 25.48 points or 0.89 per cent to 2,828.57 in thin trading. The overall market turnover was a lacklustre 1.28 billion shares worth only $687.8 million.

The rest of Asia was mostly bearish, with Shanghai down 0.5 per cent and Hong Kong off 1.02 per cent. Sydney dropped 1.53 per cent, though Tokyo managed to gain 0.15 per cent after recovering from losses earlier in the day.

The poor showing followed the 0.3 per cent drop in Dow Jones Industrial Average overnight, as Wall Street investors absorbed disappointing corporate results.

Another factor is the Nov 8 United States presidential election.

With early voting already under way, global investors are expected to keep taking money off the table in a mirror of pre-election sell-offs in the previous two US elections. And it does not help that oil prices have yet to find a firm footing. Crude oil futures Brent yesterday shed over 1 per cent to just above US$50 a barrel.

"Crude oil prices should remain volatile into year-end, given Russia's vagueness on its plans to trim output, amid suspense over Opec's implementation of an output cut later in November," OCBC analyst Barnabas Gan said yesterday.

However, he believes a production cut by the oil cartel looks likely and global growth will accelerate next year to support oil demand, giving oil prices a welcome boost.

But the prevailing mood was gloom. On the STI, only Jardine Matheson Holdings rose, adding 39 US cents or 0.64 per cent to US$61.3.

The remaining 29 STI constituent stocks all fell, led by Sembcorp Industries, which sank 10 cents or 3.92 per cent to $2.45, while its rig-making unit Sembcorp Marine shed four cents or 3.04 per cent to $1.275. Keppel Corp dipped seven cents or 1.31 per cent to $5.27.

Sembcorp Industries will announce its results today, but the figures are not likely to impress, especially after Sembcorp Marine reported a $21.8 million net loss and headcount reduction of about 8,000. "(SembMarine's) order book declined by $800 million quarter on quarter as at the end of September, and is set to decline further as we anticipate order flows to remain sluggish," DBS analyst Ho Pei Hwa warned yesterday.

"We have cut financial year 2016 and 2017 earnings by 55 per cent and 27 per cent (respectively)… We now expect Sembcorp Marine to declare a final dividend of only 0.5 cent as a token of appreciation."

Investors also sold banking stocks. OCBC sank 10 cents or 1.16 per cent to $8.55, ahead of its results announcement today. United Overseas Bank closed 11 cents or 0.58 per cent lower at $18.80 while DBS Group Holdings slid 11 cents or 0.73 per cent to $14.95.

A version of this article appeared in the print edition of The Straits Times on October 27, 2016, with the headline 'STI joins most of Asia in weak showing'. Print Edition | Subscribe