Bulls And Bears

STI falls as focus stays on possible US rate hike

Most other Asian markets end higher but region sees weekly fall after 8 months of gains

The weakness in local shares continued yesterday, though likely alleviated by the usual month-end window dressing.

The benchmark Straits Times Index (STI) dropped 7.23 points, or 0.22 per cent, to 3,219.91 yesterday - leaving it down a marginal 0.34 point or 0.01 per cent for the week.

Total traded volume on the bourse improved somewhat to 1.23 billion shares worth $1.19 billion yesterday.

Most other markets in Asia finished higher, although the region as a whole posted its first weekly fall after eight straight months of gains, its longest rally since 2007.

Hong Kong rose 0.48 per cent, Shanghai was up by 0.28 per cent and Seoul climbed 0.9 per cent. Tokyo, however, fell 0.03 per cent and Kuala Lumpur, 0.14 per cent.

The focus remained on a higher possibility of an interest rate hike in the United States this year. "People's expectation of a rate hike last month was below 50 per cent, and now it is almost close to 70 per cent, based on the implied probability of futures," Mr Joel Ng, an analyst with KGI Securities, told Reuters. "But I think I would (still) say Asia had a good rally over the last two weeks."

The three local banks were a key drag on the STI yesterday. United Overseas Bank fell 0.7 per cent or 16 cents to $23.50, OCBC Bank lost 0.5 per cent or six cents to $11.16, and DBS Group Holdings slid 0.4 per cent or nine cents to $20.82.

Stocks outside of the index were also on traders' radars, in particular those in real estate.

GuocoLand fell 1.3 per cent or three cents to $2.27. The developer's joint venture with Guoco Group put up the top bid of $1.62 billion for a state tender for a 99-year leasehold commercial site in Beach Road on Thursday, which works out to be about $1,706 per square foot (psf) per plot ratio.

DBS Equity Research said in a report that the record sum paid for the Beach Road site in psf terms "once again highlights Singapore office sector as an attractive asset class to physical market investors, and their confidence in the potential recovery of Singapore office rents".

Separately, Aspen (Group) Holdings was unchanged at 23 cents, after the Malaysia-based developer said on Thursday evening that it is buying about 22,954 sq m of freehold land for over RM66.71 million (S$21.4 million).

CIMB initiated coverage on the stock with an "add" call, noting that its unique value-added residential development model provides good margins.

Offshore services provider Mencast sank 9.8 per cent or 1.9 cents to 17.4 cents after it resumed trading. The firm, which saw a share price surge on Thursday, said it is in early-stage exploratory discussions with unnamed parties over the divestment of its assets.

The day's most active stock was Loyz Energy, which was flat at 1.4 cents on 76.1 million shares done.

A version of this article appeared in the print edition of The Straits Times on September 30, 2017, with the headline 'STI falls as focus stays on possible US rate hike'. Print Edition | Subscribe