STI bucks China yuan impact, but fails to regain ground lost during the week

The benchmark Straits Times Index bucked the regional trend to rise 22.47 points, or 0.73 per cent, closing at 3,114.25.
The benchmark Straits Times Index bucked the regional trend to rise 22.47 points, or 0.73 per cent, closing at 3,114.25. ST PHOTO: KUA CHEE SIONG

SINGAPORE - Investors in Singapore continued to shrug off concerns over the impact of a weaker Chinese yuan for a second day, helping the local bourse to end on a positive note before the weekend.

The benchmark Straits Times Index bucked the regional trend to rise 22.47 points, or 0.73 per cent, closing at 3,114.25.

But the two-day rally has not done enough to regain the ground lost in the sell-off earlier in the week - the index is down 2.58 per cent for the week.

Elsewhere in Asia, Tokyo fell 0.4 per cent and Hong Kong slipped 0.13 per cent , while Shanghai gained 0.3 per cent.

Shanghai stocks have risen 6 per cent for the week, its biggest weekly gain in two months, driven by optimism that the weaker yuan will help to boost the flagging Chinese economy.

Credit Suisse Private Banking and Wealth Management's head of Southeast Asia Research, Ms Kum Soek Ching, said the earlier sell-off in Singapore has uncovered bargain-hunting opportunities for medium-term investors, with many blue chips trading close to 10-year price-to-book lows.

"In our opinion, the sell-down on the banks is not fundamentally warranted. The sector is a beneficiary of higher interest rates, as margins get a lift from loans re-pricing," she noted.

The three local lenders, which dropped at least 4 per cent each on Wednesday after China devalued the yuan, all ended higher.

DBS Group rose 24 cents to S$19.26, OCBC Bank gained eight cents to S$9.76 and United Overseas Bank added 23 cents to S$20.58.

The Singapore Exchange (SGX) noted in a report on Friday that locally listed reits and stapled securities now offer an dividend yield of 6.6 per cent. The SGX has urged investors to exercise caution when dealing in the shares of CEFC International .

The fuel trader on Friday closed a cent lower at 38.5 cents. It had announced on Monday a share placement of about 705 million shares at 35 cents each. This after its share price shot up from 3.4 cents to 36.5 cents between July 10 and Aug 6.

"SGX reviewed the trading activities in CEFC shares during this period and observed that buying volume was concentrated in a small number of offshore accounts," the bourse operator said. "Together, these accounts accounted for more than 40 per cent of the total traded volume during the period."

SGX added it is reviewing CEFC's announcement and the trades in its shares, and will work with the relevant regulatory agencies to "pursue actions to maintain a fair, orderly and transparent market".

yasminey@sph.com.sg