Bulls And Bears

STI down 0.49% as regional bourses retreat

Caution takes hold ahead of key Fed meeting; Tokyo an outlier with post-holiday catch-up

Singapore shares pulled back yesterday alongside most bourses in Asia as caution settled in ahead of a key US Federal Reserve meeting.

The benchmark Straits Times Index (STI) eased 15.9 points, or 0.49 per cent, to 3,225.95, with a total of 1.16 billion shares worth just $946.8 million being traded across the bourse.

Elsewhere, Hong Kong fell 0.38 per cent, Shanghai dipped 0.18 per cent and Sydney pared 0.12 per cent. Tokyo was an outlier, rising by a solid 1.96 per cent as it played catch-up after a holiday.

IG market strategist Pan Jingyi noted that Asian shares had risen on Monday, buoyed by confidence from markets in the United States.

But with a lack of strong drivers behind this latest surge, the rally may not last, she said. "While US markets do reflect further room for upsides with the recent breakouts, the Fed meeting and tax reforms remain risk events for equity markets and make the appeal for caution ahead."

The Fed is expected to unveil plans to roll back its US$4.2 trillion (S$5.7 trillion) balance sheet after the Federal Open Markets Committee meeting later today.

That said, Merrill Lynch and US Trust head of fixed-income strategy Matthew Diczok told Bloomberg TV: "If you model it out, over about the next three years they'll take out about US$1.3 trillion or so. That's only a third of what they put into the market. So it's going to be very slow, very gradual, very deliberate and it shouldn't lead to any near-term fireworks in the market at all."

At home, the biggest laggards included transport group ComfortDelGro, which dropped 2.9 per cent or six cents to $2.01, and Golden Agri-Resources, down 1.3 per cent or half a cent to 38 cents.

The three local banks also finished in the red, led by OCBC Bank, which lost 1 per cent or 11 cents to $11. United Overseas Bank pared 0.8 per cent or 19 cents to $23.15, and DBS Group Holdings slipped 0.6 per cent or 12 cents to $20.37.

Outside of the STI, Sembcorp Marine put on 2.5 per cent or four cents to $1.67, after announcing on Monday night that a unit has inked a letter of intent with Houston-based SeaOne Caribbean to build two large compressed gas liquid carriers.

A CIMB report estimates the contracts will be worth about US$440 million to US$500 million. "This news is positive for SembMarine and we think the contract will materialise by end-2017 fiscal year or early- 2018 fiscal year, lifting the lacklustre order momentum year to date," it said, maintaining an "add" call on the stock with a target price of $1.87.

Property developer Rowsley was the day's most heavily traded, jumping 5.5 per cent or 0.7 cent to 13.4 cents on 223.5 million shares done. The group appointed a new chief executive on Monday. Mr Tan Wee Tuck will lead Rowsley's existing portfolio of real estate businesses, with a "focus on growth, innovation and renewing the leadership of its design and engineering business".

A version of this article appeared in the print edition of The Straits Times on September 20, 2017, with the headline 'STI down 0.49% as regional bourses retreat'. Subscribe