Bulls And Bears

Market quiet ahead of ECB decision

Despite closing slightly down, STI is still around its highest levels in two months

The mood on the local market grew subdued yesterday, unlike other leading Asian bourses which notched up further gains, as investors awaited the outcome of an European Central Bank (ECB) meeting.

The meeting, which ended after Asian markets closed, was ECB's first since the Brexit vote. The bank is expected to keep rates unchanged for now, despite concerns over the impact of Britain's vote to leave the European Union.

The benchmark Straits Times Index closed 5.26 points or 0.18 per cent lower at 2,940.48 amid the uncertainty. Trading was less active with only 949.1 million shares worth $973.2 million done.

Still, the index is around its highest levels in two months, reflecting the generally improved sentiment.

Elsewhere, Shanghai added 0.37 per cent and Hong Kong gained 0.54 per cent. Tokyo put on 0.77 per cent. Asia's broadest index, MSCI Asia ex-Japan, hit its highest level since October last year, alongside the record highs on Wall Street.

As the post-Brexit market run continues globally, some remain bearish over the outlook, such as DBS chief investment officer Lim Say Boon, who fears a global economic and earnings slowdown.

"The global composite purchasing managers' index has been in decline since late last year. Manufacturing is borderline recessionary. World trade volumes have been dipping in and out of contraction since the fourth quarter of last year," Mr Lim said in a note yesterday.

"More importantly, the corporate earnings recession is now well and truly global, with the decline in the emerging markets now spreading to the United States and Europe," he cautioned, adding that US stocks will dip at least 10 per cent as a result in the second half. The earnings season at home has also been less than impressive. After largely lukewarm earnings unveiled by its entities earlier this week, Keppel Corp yesterday reported a 48 per cent drop in second-quarter net profit.

Keppel closed two cents or 0.36 per cent lower at $5.58, one of 12 STI components that ended in the red. Rival Sembcorp Marine shed one cent or 0.65 per cent to $1.525.

Other losing blue chips included Thai Beverage, off two cents or 1.96 per cent to $1, and Singtel, down seven cents or 1.63 per cent to $4.23 on 24.4 million shares traded.

CapitaLand Commercial Trust closed flat at $1.56. Ascendas Real Estate Investment Trust was also flat, closing at $2.49, ahead of it announcing a 4 per cent rise in distribution per unit on higher earnings.

Golden Agri-Resources was yesterday's top gainer on the STI, adding one cent or 2.86 per cent to 36 cents. City Developments rose 20 cents or 2.33 per cent to $8.77.

Outside the STI, SMRT resumed trading amid a torrent of market buzz following Temasek Holdings' takeover bid. It closed 12.5 cents or 8.22 per cent higher at $1.645, still below the $1.68 price tabled by the Singapore state investor.

A version of this article appeared in the print edition of The Straits Times on July 22, 2016, with the headline 'Market quiet ahead of ECB decision'. Print Edition | Subscribe