Bulls And Bears

Lack of good news keeps investors away

2016 outlook unlikely to improve amid China slowdown, S'pore restructuring, says Citi

Singapore shares dawdled through another slow day, with investors unwilling to enter the year-end market amid a dearth of good news.

The Straits Times Index (STI) fell for a second day, paring 14.84 points, or 0.52 per cent, to 2,861.19. Volume was also tepid, with only 806.6 million shares transacted across the whole market.

Remisier Desmond Leong said that with such weak volumes, local shares will be vulnerable to wild swings created by market events, and volatility will be the norm for the remainder of this year.

"For instance, everyone is expecting a rate hike announcement by the Federal Reserve next week, but the fact is nobody really knows for sure. Not many will want to bet against this much uncertainty."

In its Singapore equities report yesterday, Citi Research anticipated a similarly choppy outlook, tipping a slow 2016, with the STI closing at 3,033 by year-end, a fraction above current levels.

"Singapore has been among Asean's weakest markets year to date due to concerns about the impact of China's slowdown," Citi said, adding that Singapore companies will continue to face the pressure of economic restructuring.

Citi's top picks include Venture Corp and ST Engineering, both earning United States dollars and are hence less susceptible to currency pressure. Flight service provider Sats is also favoured for its strong cash flow generation and exposure to a growing aviation traffic in Asia.

ST Engineering was one of the better performers on the STI, rising two cents, or 0.69 per cent, to $2.92. Sats also rose, up two cents, or 0.53 per cent, to $3.82.

The top-gaining blue chip was Noble Group, up 1.5 cents, or 3.85 per cent, to 40.5 cents, while Singapore Press Holdings put on two cents, or 0.52 per cent, to $3.87.

But the day's highlight was China Environment. The green tech firm was the market's top active counter with 61.99 million shares changing hands. Its shares shot up 2.6 cents, or 43.33 per cent, to 8.6 cents.

The surge came before China Environment announced that unit Fujian Dongyuan Environmental Protection has won a bank loan approval that would lift its credit record.

Neptune Orient Lines closed flat at $1.22, with the market seemingly unmoved by CMA CGM's offer to buy out NOL at $1.30 a share.

Mr Leong was not surprised, as the deal is not set in stone yet. "The completion of the deal is subject to anti-trust approval by regulators in Europe by December next year, among other conditions."

Overseas markets were mixed, with Shanghai rising a marginal 0.07 per cent. Hong Kong, however, dropped 0.46 per cent and Tokyo lost 0.98 per cent.

Global markets are being rocked by the still-plunging oil prices as fears of supply glut pile up. As such, the crude benchmark Brent futures fell below US$40 a barrel overnight for the first time in seven years.

A version of this article appeared in the print edition of The Straits Times on December 10, 2015, with the headline 'Lack of good news keeps investors away'. Subscribe