Bulls And Bears

Regional worries over US$ drag down STI

Banks in the eye of the storm as greenback and bond rally sours sentiment

Local shares took a beating yesterday amid regional concern over a strengthening greenback and higher US Treasury yields.

The souring mood sent the Straits Times Index down 35.81 points, or 1.1 per cent, to 3,231.59.

In all, losers beat gainers 281 to 136 with 1.65 billion shares worth $1.12 billion traded.

Mr Stephen Innes, head of Asia-Pacific trading at currency broker Oanda, noted: "Asia stocks are not faring so well, which is not so un-typical when the US dollar strengthened markedly... notably against the yuan, which is a crucial bellwether of local sentiment."

The banks were in the eye of the storm.

DBS fell 0.73 per cent to $25.76, OCBC lost 0.88 per cent to $11.29 while United Overseas Bank shed 0.89 per cent to $26.65.

Still, RHB Securities named DBS one of its top buys, with a target price of $30.30, noting that a rising US Federal Reserve funds rate will widen the net interest margin at DBS more than at its banking peers.

Also down was developer CapitaLand, which snagged a $300 million multi-currency sustainability-linked loan from DBS with a five-year term. It fell 1.19 per cent to $3.31.

Telco Singtel fell 0.31 per cent to $3.24.

Agri-business Wilmar International rose 0.63 per cent to $3.21. Wholly owned Wilmar Ventures was named lead investor in the US$50 million (S$69 million) funding round for a pharmaceutical firm, alongside a private equity fund backed by Nestle.

StarHub was among the day's top gainers. It added 4.28 per cent to $1.95 on news of a strategic overhaul that involves axing 300 full-time staff, with the goal of $210 million in savings.

All the same, Nomura - which has upgraded the counter to "neutral"- warned: "Business transformations are tricky - based on transformation plans seen at other regional telcos, we do not have many instances where the final results post-transformation matched the initial objectives."

Rival M1, the target of a $2.06-a-share buyout offer by Keppel Corp and Singapore Press Holdings, closed up 0.47 per cent at $2.12.

Bloomberg Intelligence said M1's earnings "probably declined in the third quarter, even after a surprise gain in the second quarter", citing pricing competition among mobile virtual network operators.

Elsewhere, Hong Kong lost 1.73 per cent to finish at a three-week low, while Tokyo fell by 0.56 per cent.

A version of this article appeared in the print edition of The Straits Times on October 05, 2018, with the headline 'Regional worries over US$ drag down STI'. Subscribe