Bulls And Bears

STI slides on fears of capital flight from Asia

Strong US dollar draws concerns for regional currencies, with EU attacks adding to worries

Singapore shares slid yesterday, in line with most regional peers, on continued worries that a stronger United States dollar will spell further capital outflows from this part of the world.

In addition, a series of fatal attacks in Germany, Turkey and Switzerland also weighed on markets.

The benchmark Straits Times Index (STI) dipped 1.77 points, or 0.06 per cent, to 2,911.31, despite a promising start earlier in the day.

Turnover across the bourse was fairly thin, with just 1.62 billion shares worth $976.5 million changing hands.

This came as US Federal Reserve chairman Janet Yellen said on Monday that the US jobs market has grown to its strongest in nearly a decade, reinforcing the Fed's hawkish view on the pace of rate hikes next year. Wall Street advanced 0.2 per cent overnight as a result, while the greenback strengthened.

"Nevertheless, the slight gains on Wall Street are unlikely to provide much inspiration, with pockets of unrest weighing on markets," said IG market strategist Jingyi Pan. She noted that the stronger US dollar has drawn concerns about Asian currencies. Such a scenario typically prompts fund flows from emerging markets in Asia back into the US.

Shanghai slid 0.49 per cent, while Hong Kong shed 0.47 per cent.

Tokyo added 0.53 per cent after the Bank of Japan kept its monetary policy unchanged, as expected.

At home, DBS Group Holdings was among the blue chips that performed poorly, falling 15 cents or 0.8 per cent to $17.55. OCBC Bank lost four cents or 0.4 per cent to $9.08. However, United Overseas Bank was the sole gainer among the trio, inching up six cents or 0.3 per cent to $20.86.

Golden Agri-Resources put in a strong showing, rising 1.5 cents or 3.5 per cent to 44.5 cents.

A number of counters drew trading queries from the Singapore Exchange, including engineering specialist Acromec, which plummeted more than 20 per cent in the morning. The stock finished 10 cents or 17.4 per cent lower at 47.5 cents. The company said it was not aware of any possible explanation behind the steep fall. New Silkroutes Group, which was also queried, closed 8.5 cents or 11 per cent down at 68.5 cents. Geo Energy Resources rose one cent or 4.5 per cent to 23 cents. The coal-mining group announced after market close on Monday that it will supply global commodity trader Engelhart CTP (Singapore) with at least seven million tonnes of coal next year, under an offtake agreement signed in July.

The group added that it will, through its subsidiary, Geo Coal International, receive a prepayment of US$40 million (S$58 million) for next year in conjunction with this supply.

The day's most heavily traded stock was commodity trader Noble Group, which slipped 0.1 cent or 0.6 per cent to 16.2 cents on 59.1 million shares done.

A version of this article appeared in the print edition of The Straits Times on December 21, 2016, with the headline 'STI slides on fears of capital flight from Asia'. Print Edition | Subscribe