Bulls And Bears

Oil price worries dampen mood in markets

S'pore and most other markets in Asia lose ground, mirroring Wall Street performance

Crude oil storage tanks are seen from above at the Cushing oil hub, in Cushing, Oklahoma.
Crude oil storage tanks are seen from above at the Cushing oil hub, in Cushing, Oklahoma. PHOTO: REUTERS

Singapore shares lost some ground yesterday in line with most other regional markets, weighed down largely by lower crude prices.

The benchmark Straits Times Index (STI) slid 5.75 points, or 0.2 per cent, to 2,869.82. Some one billion shares worth $1.02 billion changed hands across the bourse. This mirrored Wall Street's limp showing amid sluggish earnings, as the Dow Jones Industrial Average dropped 0.2 per cent and the S&P 500 lost 0.29 per cent on Wednesday.

Elsewhere in Asia, Shanghai shed 0.53 per cent, dragged down by resources stocks and small-caps, and Sydney sank 0.64 per cent.

Hong Kong bucked the trend, climbing 0.39 per cent to an eight-month high, buoyed by speculation that an exchange trading link with Shenzhen will kick off soon.

Tokyo was closed for a holiday.

"The biggest risk to the market at the moment is a huge drop in oil prices," Mr James Woods, a strategist at Rivkin Securities in Sydney, told Bloomberg. "Recent gains are becoming exhausted. We'll see some near-term weakness in the coming weeks. Investors are likely to be buying on these dips as central bank policies remain supportive of equities."

Of the 30 STI constituents, only six rose as 19 fell and five were flat.

All three local banks finished weaker, led by United Overseas Bank, which fell 18 cents or 1 per cent to $17.87.

"Whether this is in reaction to the weak second-quarter GDP (gross domestic product) for Singapore, which was released pre-market opening or a continuation of the flight from banks as the concerns over their collective oil and gas exposure continue to mount - Singapore bank stocks have seen better times," noted KGI Fraser Securities trading strategist Nicholas Teo.

On the other hand, Singtel helped prop up the index, rising seven cents or 1.7 per cent to $4.27.

Sembcorp Marine jumped seven cents or 5.4 per cent to $1.37. The rig-builder was queried by the Singapore Exchange after its share price rose as much as 6.1 per cent to an intra-day high of $1.38, although it said later it was not aware of any possible explanation for the unusual trading activity.

Outside of the blue chips, Ezion Holdings finished flat at 29 cents after posting a 31.5 per cent fall in net profit for the second quarter ended June 30 to US$19.8 million (S$26.6 million), while warning that strong headwinds will continue into the second half of the year.

"If not for a one-off asset disposal of US$15.3 million, the reported bottom line would have been woeful," said a trader in a NetResearch Asia report.

Specialist healthcare provider Singapore Medical Group soared 5.5 cents or 20.4 per cent to 32.5 cents after RHB initiated coverage on the company with a "buy" rating and a target price of 45 cents. Noble Group was the top active counter, adding 0.7 cent or 4.7 per cent to 15.5 cents on 79.1 million shares done.

A version of this article appeared in the print edition of The Straits Times on August 12, 2016, with the headline 'Oil price worries dampen mood in markets'. Print Edition | Subscribe