Bulls And Bears

N. Korea's nuke threat hits most Asian stocks

STI bucks trend, thanks to bank counters, as emerging markets hit by Fed statement

Most Asian stock indices flashed red yesterday after North Korea's Foreign Minister told a United Nations meeting in New York late on Thursday that the rogue state may test a hydrogen bomb of "unprecedented scale" in the Pacific Ocean.

North Korean leader Kim Jong Un also released his first direct address to the world, saying of US President Donald Trump: "I will surely and definitely tame the mentally deranged US dotard with fire."

With few other cues to go on during the otherwise quiet news day, South Korea's Kospi sank 0.74 per cent, the Nikkei 225 fell 0.25 per cent, while the Hang Seng shed 0.82 per cent.

The Straits Times Index (STI) gained 6.43 points or 0.2 per cent to finish at 3,220.25, buoyed by DBS Group Holdings, OCBC Bank and United Overseas Bank. It put on 0.33 per cent for the week.

Emerging market stocks seemed to lose some favour, following the latest US Federal Open Market Committee meeting statement that was more hawkish than expected. The night before, US stocks also retreated from record highs, with tech shares like Apple leading the fall.

Chinese stocks also lost some footing yesterday after ratings agency S&P cut China's sovereign credit rating down a notch - a negative for China's corporates. But the implication for markets was limited, with the Shanghai Composite Index closing only 0.16 per cent lower.

IG market strategist Jingyi Pan said: "While China's rate cut by S&P did capture headlines and may ruffle the authorities ahead of the country's monumental 19th National Party Congress, the market is well aware that this amendment brings the ratings in line with fellow Moody's and Fitch's views."

In the broader Singapore market, turnover fell to $1 billion with 1.4 billion shares changing hands. Losers outnumbered gainers 229 to 165.

Shares of crane supplier Tat Hong Holdings surged 6.5 cents or 16.05 per cent to 47 cents on record volume yesterday after it revealed that it had been approached by certain parties over a potential transaction involving its securities. Tat Hong said it has appointed Rippledot Capital Advisers as a financial adviser.

The Reit most in play was CapitaLand Commercial Trust, which fell 2.5 cents or 1.47 per cent to $1.67 yesterday after announcing its much-anticipated acquisition of Asia Square Tower 2 for $2.1 billion.

RHB analyst Vijay Natarajan said in a note that the acquisition price was attractive.

"However, the transaction - funded partly by a rights issue - is DPU-dilutive," he wrote, referring to the distribution per unit. "Overall, we see the move as a short-term negative and a long-term positive if CCT manages to extract value from the asset by capitalising on the office uptrend. Take profit."

IG's Ms Pan said the focus on the US will likely continue next week. "Next week's tax policy plan could (affect) regional markets."

A version of this article appeared in the print edition of The Straits Times on September 23, 2017, with the headline 'N. Korea's nuke threat hits most Asian stocks'. Print Edition | Subscribe