Bulls And Bears

STI falls amid fresh fears of US rate hike

Market dampened by Fed chief 's comments that interest rates may rise next month

Singapore shares bucked the regional trend yesterday, closing lower amid renewed jitters that the United States Federal Reserve might raise interest rates as soon as next month.

The benchmark Straits Times Index ended the day down 16.83 points, or 0.55 per cent, to 3,023.65.

The glum mood returned after two days of gains following Fed chairman Janet Yellen's remarks overnight that rates might rise next month.

Tokyo-based Ichiyoshi Asset Management executive officer Mitsushige Akino told Bloomberg: "Yellen really means it when she says she wants to raise interest rates this year, so as long as employment or inflation doesn't disappoint, it remains a real possibility that she will follow up on her words."

Most regional bourses, however, rose yesterday.

Japan Post soared again after a stellar debut on Wednesday, pulling Tokyo up 1 per cent.

Shanghai, still rejoicing at stimulus measures announced by the Chinese central bank, gained 1.8 per cent while Hong Kong closed unchanged.

At home, commodity plays, which have been battered amid slumping resource prices, were mixed yesterday.

Noble Group slipped a cent to 51.5 cents, Wilmar lost a cent to $3.09, Golden Agri-Resources was flat at 38.5 cents and Olam International rose a cent to $2.01.

Yangzijiang Shipbuilding fell three cents to $1.22 after reporting on Wednesday that its net profit for the third quarter to Sept 30 fell 16 per cent. Executive chairman Ren Yuanlin said the firm was battling stiff competition amid "one of the most challenging years in recent history" for the Chinese shipbuilding industry.

Ground handling and in-flight catering provider Sats climbed nine cents to $3.89 after second-quarter net profit rose 26.8 per cent. CIMB Research analyst Lim Siew Khee maintained her "hold" call on the stock, noting that it has risen about 23 per cent in the past 12 months already.

SIA Engineering rose five cents to $3.98 after posting a 5.7 per cent increase in its second-quarter net income from the previous year.

Maybank Kim Eng Research analyst Derrick Heng maintained his "hold" call on the stock, citing its valuation.

"The recent rebound in flight traffic at Changi Airport should benefit SIA Engineering's line maintenance business," he wrote.

"Next year, airlines may increase capacity and slow their fleet retirement in response to lower oil prices. This should drive a cyclical pick-up in the maintenance workload in the year ahead.

"However, we stay neutral on the stock as valuations remain unattractive."

A version of this article appeared in the print edition of The Straits Times on November 06, 2015, with the headline 'STI falls amid fresh fears of US rate hike'. Print Edition | Subscribe