Singapore shares close lower over month end rebalancing of portfolios

A man leaves the SGX Singapore Exchange building in Singapore's central business district, on Jan 7, 2016.
A man leaves the SGX Singapore Exchange building in Singapore's central business district, on Jan 7, 2016.PHOTO: REUTERS

SINGAPORE - Singapore shares closed slightly lower, after earlier gains following a rally in Chinese and Hong Kong markets were wiped out by the rebalancing of portfolios at month end by some fund managers.

"This could be due to short positions initiated towards the end of the trading day, or a rebalancing of portfolios at month-end by bigger players," Mr Lee Yu Sheng, trading representative of Maybank Kim Eng.

The Straits Times Index had rallied as much as 1.3 per cent as optimism grew over a possible inclusion of Chinese stocks in MSCI, an influential global benchmark.

Expectations that MSCI will soon add mainland-traded Chinese stocks, or A-shares, in its Emerging Markets Index - a move that could channel billions in passive asset-management money into China, lifting stock prices, sent Shanghai up 3.34 per cent, Shenzhen up 4.09 per cent and Hong Kong up 0.9 per cent.

But the STI gave back all gains in the final hour of trade, closing 0.2 per cent or 5.69 points down to 2,791.06. Singtel shed 0.8 per cent or three cents to S$3.87; Keppel Corp sank 1.8 per cent or 10 cents to S$5.38; Genting Singapore shed 2.6 per cent or two cents to 74 cents, and DBS Group, fell 0.3 per cent or five cents to S$15.50.

Other bank counters, OCBC and UOB held up. OCBC was up 0.8 per cent or seven cents to S$8.62, and UOB up 0.1 per cent or one cent to S$18.22.

"We expect bank stocks OCBC and UOB to be underpinned by higher United States interest rate expectations as that also implies an improving US economy. From a technical perspective, their recent correction looks to have ended," DBS Group Research said.

DBS, in a report Tuesday, said it has turned "from cautious in the recent months to neutral or cautiously optimistic," on the Singapore market amid existing uncertainties.

Noble rebounded 5.4 per cent or 1.5 cents to 29.5 cents, with 98.6 million shares traded; while Global Logistic Properties dipped 0.3 per cent or 0.5 cents to S$1.81, with 54.5 million shares traded.

gleong@sph.com.sg