S'pore investors unfazed by weaker yuan

ST Index rises for second day but is down by 2.6% for the week

Local investors continued to shrug off concerns over the impact of a weaker Chinese yuan for a second day, helping the local bourse to end the week on a positive note.

The benchmark Straits Times Index bucked the regional trend to rise 22.47 points, or 0.73 per cent, closing at 3,114.25.

But the two-day rally was not enough to regain the ground lost in the sell-off earlier in the week - the index lost 2.58 per cent for the week.

Elsewhere in Asia, Tokyo fell 0.4 per cent and Hong Kong slipped 0.1 per cent, while Shanghai gained 0.3 per cent.

Shanghai stocks have risen 6 per cent for the week, their biggest weekly gain in two months, driven by optimism that the weaker yuan will help to boost the flagging Chinese economy.

Credit Suisse Private Banking and Wealth Management's head of South-east Asia Research, Ms Kum Soek Ching, said the earlier sell-off in Singapore has uncovered bargain-hunting opportunities for medium-term investors, with many blue chips trading close to 10-year price-to-book lows.

"In our opinion, the sell-down on the banks is not fundamentally warranted. The sector is a beneficiary of higher interest rates, as margins get a lift from loans re-pricing," she noted.

The three local lenders, which dropped at least 4 per cent each on Wednesday after China's devaluation, all ended higher yesterday.

DBS Group Holdings rose 24 cents to $19.26, OCBC gained eight cents to $9.76 and United Overseas Bank rose 23 cents to $20.58.

The Singapore Exchange (SGX) noted in a report yesterday that locally listed Reits and stapled securities now offer a dividend yield of 6.6 per cent.

Among the highest-yielding Reits are Viva Industrial Trust, which climbed half a cent to 77 cents, Sabana Shariah Compliant Industrial Reit, up a cent to 80 cents, and AIMS AMP Capital Industrial Trust, up two cents to $1.45.

The SGX has urged investors to exercise caution when dealing in the shares of CEFC International. The fuel trader yesterday closed a cent lower at 38.5 cents.

It had announced on Monday a share placement of about 705 million shares at 35 cents each. This was after its share price shot up from 3.4 cents to 36.5 cents between July 10 and Aug 6.

"SGX reviewed the trading activities in CEFC shares during this period and observed that buying volume was concentrated in a small number of offshore accounts," the bourse operator said. "Together, these accounts accounted for more than 40 per cent of the total traded volume during the period."

SGX added it is reviewing CEFC's announcement and the trades in its shares, and will work with the relevant regulatory agencies to "pursue actions to maintain a fair, orderly and transparent market".

A version of this article appeared in the print edition of The Straits Times on August 15, 2015, with the headline 'S'pore investors unfazed by weaker yuan'. Print Edition | Subscribe