Weak China flash PMI drags down Asian markets, STI closes 23 points down

SINGAPORE - Singapore shares took another round of beating on Wednesday, alongside key regional markets that were jittery over the latest sign of economic slowdown in China.

The benchmark Straits Times Index (STI) fell for the second straight day by 22.73 points or 0.79 per cent to 2,845.74, just a hair above the full-year low at 2,841.

The decline at home was part of the region wide retreat that came after a flash Caixin data showed that China's manufacturing activities in September fell to the lowest level in over six years.

HSBC Global Research economist Julia Wang said: "The data highlights the considerable headwinds to growth from soft global demand. This will likely weigh on manufacturing sector output as well as investment, as well as further adding to disinflationary pressures."

In response, the already jump investors - who are still cautious over the uncertainties around the timing of Federal Reserve's rate hike - rushed for exit, pushing the region's biggest benchmark MSCI Asia ex-Japan down 2.3 per cent, the biggest fall in a month.

The move by the Asian Development Bank overnight to lower its growth forecast for China to 6.8 per cent did not help, sending Dow Jones Industrial Average at Wall Street down 1.09 per cent.

Taking the cue, Shanghai pared 2.19 per cent while Hong Kong lost 2.26 per cent yesterday. At Kuala Lumpur, the euphoria over the recently announced market stimulus is also wearing off, with its benchmark dropping 1.36 per cent. Trading in Tokyo was closed for a public holiday.

In Singapore, the shorter trading week due to the holiday today was also part of the reason why traders took closed their position, remisier Alvin Yong said, adding: "The local shares will remain range-bound between 2,800 and 3,000 in the near term.

"I'm not ruling out the possibility of the STI breaking below the 2,800 psychological level, but the Fed's decision to hold back on rate hike will provide at least some breathing room."

As the gloomy day drew to a close, only six blue chip counters on the STI were able to close higher, with Singapore Airlines gaining the most as the carrier closed 20 cents or 1.89 per cent up at $10.81. Another transport play, ComfortDelGro, rose three cents or 1.06 per cent to $2.87.

Outside the STI, Mainboard-listed Rowsley enjoyed a 1.3 cent or 8.78 per cent rise to 16.1 cents. Sentiments on the real estate and architecture firm improved after its announcement on Tuesday to convert its stagnant Iskandar project Vantage Bay into a healthcare city. Also on the Mainboard, China Mining International was up 10 cents or 28.57 per cent to close at 45 cents, two days after it completed its share consolidation.

The volatility around share consolidations that companies are embarking before the 20-cent minimum trading price requirement full kicks in next year was a topic of discussion at Singapore Exchange's annual general meeting on Wednesday, where shareholders asked the bourse to stabilise the market with more prescriptive guidelines.

whwong@sph.com.sg