Bulls And Bears

Markets dip as Fed hints of more rate hikes

Asian investors take their cue from Wall Street and play it safe on a 'slack day'

Local shares closed flat yesterday as investors here and across the region took stock of economic news out of the United States.

The latest Federal Reserve meeting minutes leaned towards a more hawkish tone, with hints of more interest rate rises to come in a bid to keep the economy steady.

The US Treasury also refrained from naming China as a currency manipulator, averting a further escalation of the trade war. The US dollar surged on the Fed's optimism.

Investors here took their cue from Wall Street and played it safe, leaving the Straits Times Index largely unmoved, with a decline of just 1.43 points or 0.05 per cent to 3,069.67. Losers outnumbered gainers 208 to 152 on trade of 1.98 billion shares worth $927.5 million.

RHB analyst Jarick Seet noted that it was generally a "slack day", as uncertainty continued to weigh on the market with investors trying to see how the US market pans out.

Property stocks took a beating after the Urban Redevelopment Authority's (URA) move to rein in the proliferation of shoebox flats.

Among the hardest hit were UOL Group, City Developments Limited (CDL) and Ho Bee Land, which all fell about 1.6 per cent. Bukit Sembawang and GuocoLand both lost 0.5 per cent.

Banks also drifted lower, with UOB, DBS and OCBC tumbling 0.6 per cent across the board.

But a remisier noted that property and banking stocks fared better than expected. CGS-CIMB maintained its "neutral" rating on the Singapore property sector in a note earlier this week, adding that it prefers diversified developers such as UOL, CDL and Ho Bee Land.

DBS analysts Derek Tan and Rachel Tan said yesterday that the URA move would pose a further headwind for developers and represents a "final nail in the coffin for the en bloc market". The analysts expect land prices to drop by as much as 20 to 40 per cent, with home-seekers likely to hold back buying until next year.

The more active index stocks included Genting Singapore, up 0.5 per cent to 95 cents with 39.5 million shares traded, while YZJ Shipbuilding rose 4.6 per cent to $1.37 on trade of 34.9 million shares.

Noble lost 4.4 per cent to 10.9 cents after announcing it had published its explanatory statement for its financial restructuring scheme.

Most of Asia also struggled. Hong Kong's Hang Seng ended flat, while Shanghai fell 2.9 per cent to its lowest level in almost four years. South Korea's Kospi lost 0.9 per cent.

A version of this article appeared in the print edition of The Straits Times on October 19, 2018, with the headline 'Markets dip as Fed hints of more rate hikes'. Print Edition | Subscribe