Bulls And Bears

STI down as general wariness prevails

Anti-terror raids in Paris, worry over Chinese economy add to investors' sober outlook

A dour mood continued to hang over the local market yesterday amid more violence in Paris and worries over China's economy.

The benchmark Straits Times Index (STI) was down 30.7 points or 1.05 per cent to 2,886.08, with only around 213.4 million shares transacted across the blue chip counters. Overall volume was also low, with about 951.1 million shares worth $902.8 million changing hands.

Elsewhere, markets were mostly down. Shanghai pared 1.01 per cent, Hong Kong dropped 0.34 per cent and Kuala Lumpur closed down 0.3 per cent. However, the Nikkei rose a marginal 0.09 per cent.

The weak regional showing followed news of anti-terror raids in Paris, a stark reminder for investors of the strong geo-political headwinds and the need to curb risk.

And over in China, President Xi Jinping warned that the economy was facing "considerable downward pressure".

At home, investors are still wary about the interest rate outlook, with markets bracing themselves for a rate hike by the US Federal Reserve next month. Remisier Alvin Yong said: "Among traders, the consensus is that there is an 80 per cent chance of a hike announcement in December, so, naturally, people are taking a wait-and-see stance." There is also the question of how fast the rate is raised.

It was no wonder blue chips had a torrid day, with only three STI constituents closing up.

Ascendas Real Estate Investment Trust was the top gainer of the bunch, up two cents or 0.89 per cent to $2.26. CapitaLand rose one cent or 0.33 per cent to $3.07. SIA Engineering closed one cent or 0.27 per cent up at $3.74.

Investors were heartened to hear that CapitaLand is optimistic about its growth prospects in China, where the property giant has around $21.4 billion worth of assets, about 46 per cent of the group's total, its China chief executive Lucas Loh said this week.

But the rest of the STI struggled yesterday, with top loser Yangzijiang Shipbuilding down 3.5 cents or 3.06 per cent to $1.11.

Energy and commodity stocks were hit, with the strong US dollar pressuring prices. Brent crude futures settled down 2.2 per cent overnight at US$43.57 per barrel.

Sembcorp Industries lost 10 cents or 2.94 per cent to $3.3, Sembcorp Marine pared five cents or 2.22 per cent to $2.20 and Keppel Corp shed 12 cents or 1.76 per cent to $6.69.

Against this backdrop, investors are likely to look more at opportunities in the small and mid-cap segment, Mr Yong noted, adding: "I continue to see stocks in the segment trading substantially below their book value."

NOL, which rose one cent or 0.89 per cent to $1.13, on Tuesday confirmed it is still in talks with foreign conglomerates looking to acquire it. The shipping firm had earlier said bidders include France's CMA CGM and industry giant Maersk.

A version of this article appeared in the print edition of The Straits Times on November 19, 2015, with the headline 'STI down as general wariness prevails'. Print Edition | Subscribe