Market dips as concerns over China persist

Assurances by Chinese central bank chief of coming stability fall flat among wary investors

Asian stocks retreated yesterday as traders tread cautiously ahead of fresh Chinese economic data due this week.

The Chinese markets, which resumed trading after being closed last Thursday and Friday for a public holiday, continued to be plagued by worries over the country's slowing growth.

Shanghai fell 2.52 per cent following a volatile session, despite assurances by China's central bank governor at the weekend that both the markets and the yuan should stabilise in coming weeks. Hong Kong slipped 1.23 per cent, although Japan bucked the trend with a 0.38 per cent gain.

The selldown on Wall Street on Friday, with the Dow Jones Industrial Average sliding 1.66 per cent after August non-farm payroll figures in the US missed expectations, also did little to lift sentiment here.

"The key focus this week would be China as the market reopens," Mr Michael McCarthy, chief market strategist at CMC Markets in Sydney, told Bloomberg.

"Investors are increasingly concerned about the slowdown in the Chinese economy."

The benchmark Straits Times Index (STI) shed 11.4 points, or 0.4 per cent, to 2,852.41.

IG market strategist Bernard Aw noted that the STI was affected by the largely risk-averse appetite, although "good support" was sighted at the 2,850 level.

"Further signs of stability in the global markets will strengthen the support at this level," he said.

Yesterday's losses were led by commodity plays as the sector continues to sink into the doldrums.

Agri-business group Wilmar International was the day's biggest loser, falling 11 cents or 4 per cent to $2.63, while commodities trader Noble Group dropped one cent or 1.9 per cent to 51.5 cents. Palm oil giant Golden Agri-Resources slipped half a cent or 1.7 per cent to 29.5 cents.

Olam International, which will be dropped from the STI component stock line-up from Sept 21, continued to head south, dipping two cents or 1.01 per cent to $1.96.

Local lenders OCBC Bank and DBS Group Holdings also declined. OCBC pared three cents or 0.34 per cent to $8.83, while DBS dipped six cents or 0.34 per cent to $17.44. United Overseas Bank closed flat at $19.15.

Aircraft maintenance and repair company SIA Engineering was among the day's few gainers, climbing six cents or 1.8 per cent to $3.46.

Outside of the blue chips, social e-commerce firm YuuZoo Corporation jumped one cent or 7.5 per cent to 14.4 cents, bolstered by news of its $30 million funding facility for the next three years from New York-based private alternative investment group GEM Global Yield Fund.

Airport solutions provider Stratech Group was the most active stock, with 65.1 million shares traded. It closed flat at 5.9 cents.

A version of this article appeared in the print edition of The Straits Times on September 08, 2015, with the headline 'Market dips as concerns over China persist'. Print Edition | Subscribe