STI dips as investors digest glut of news

SembMarine's legal issues, reforms to Reit sector leave bulls and bears fighting it out

A news-heavy day left local investors with plenty to digest during a busy mid-week session.

The very different factors - from Sembcorp Marine's legal issues to reforms to the Reit sector - left the bulls and bears fighting it out.

It pretty much ended in a draw with the Straits Times Index (STI) finishing 3 points, or 0.09 per cent, lower at 3,367.80.

"The market seems to be in waiting mode for more data, such as Friday's US jobs report, to assess the impact of the trade war and supporting evidence for a rate cut," UOB Kay Hian trading representative Brandon Leu noted.

Trading volumes here clocked in at 1.57 billion securities worth $1.3 billion with gainers outgunning losers 205 to 188, while 13 of the STI's 30 counters ended in the red.

Genting Singapore was the STI's most traded, losing 2.7 per cent to 91 cents with 82.8 million shares done.

Investors dumped the casino operator after a JPMorgan downgrade to "underweight" with a target price of 83 cents.

The growing inclination by central banks to cut rates has allowed real estate investment trusts (Reits) to benefit, but levels are now at pricey valuations.

Higher prices have not deterred investors and Tuesday's news that the Monetary Authority of Singapore may raise their leverage limit of 45 per cent saw broad gains yesterday, with the iEdge S-Reit 20 Index adding 1.1 per cent.

A higher leverage limit might enable trusts to better compete against private capital and foreign Reits when making acquisitions.

Much attention was on SembMarine after the Brazilian authorities executed a search warrant for its local unit. This led to a sell-off of the offshore and marine firm yesterday.

One trader said: "If the investigations do not hurt SembMarine greatly, (it) will come back stronger. But for that to happen, SembMarine needs to win more contracts."

SembMarine shed 8.4 per cent to $1.41, while parent Sembcorp Industries dipped 2.4 per cent to $2.41.

The manufacturing and semiconductor sectors might face headwinds from Japan-Korea tensions. "Japan's decision to curb exports of high-tech materials to South Korea could have a significant impact on supply chains, not only in Korea but also in the region," said DBS Group Research economist Ma Tieying.

The effect was muted yesterday: Venture Corp down just 0.3 per cent to $16.63; Hi-P International lost 0.7 per cent to $1.43, and AEM Holdings was flat at $1.06.

A version of this article appeared in the print edition of The Straits Times on July 04, 2019, with the headline 'STI dips as investors digest glut of news'. Print Edition | Subscribe