Bulls And Bears

STI falls further on Fed rate, oil price fears

Market here and in region thrown into confusion after Fed governor's remark

Singapore stocks slid for the third straight session yesterday to join Asia's key markets in a region-wide retreat as interest rate uncertainty and weak oil prices left investors uneasy.

The Straits Times Index closed down 9.03 points, or 0.32 per cent, at 2,809.35. This was less severe than Tuesday's 1.91 per cent drop - the worst since June - but it extended STI's recent loss to 2.94 per cent since last Thursday's close.

Elsewhere, sentiment was just as downcast. Shanghai shed 0.68 per cent and Hong Kong dropped 0.11 per cent despite the positive August data on China's factory output and retail sales yesterday.

Tokyo was off by 0.69 per cent, while Kuala Lumpur was down 0.94 per cent, as the Malaysian ringgit touched a three-month low against the greenback.

"I expect volatility to continue all the way up to the Fed meeting next week. The markets were thrown back into confusion again after the dovish stance on September hike by Brainard," remisier Alvin Yong said, referring to Federal Reserve governor Lael Brainard.

The choppy session yesterday saw 17 of the 30 STI component stocks end in the red, with top loser Hutchison Port Holdings Trust paring one US cent, or 2.27 per cent, to 43 US cents on 23.8 million shares traded. Ascendas Real Estate Investment Trust (Reit) shed five cents or 2.06 per cent to $2.38.

Sembcorp Marine lost two cents, or 1.56 per cent, to end at $1.265, steadily heading south to its full-year low of $1.23, as crude Brent futures stayed below US$48 a barrel.

Forecasts by the International Energy Agency and the Organisation of the Petroleum Exporting Countries this week that downgraded the demand figures for 2017 was a "nail in the coffin", Oanda senior market analyst Jeffrey Halley said, adding that the market will eye the United States weekly inventory report out after Asian hours for further clarity.

Still, Mr Yong believes oil and gas engineering firm PEC, outside the STI, is worth a look. The counter, which dropped half a cent, or 1 per cent, yesterday to 49.5 cents, is trading at a discount while seeing improved performance, he said.

Late last month PEC announced a fourth-quarter net profit of $8.2 million, up from the $7.8 million net loss a year earlier. With a dividend yield of around 2 per cent, PEC's year-to-date return is now around 24 per cent.

Six blue chips rose. Thai Beverage returned to its winning ways, up 1.5 cents, or 1.63 per cent, to 93.5 cents with 29.4 million shares traded.

Wilmar International added one cent, or 0.32 per cent, to $3.15, while Global Logistic Properties (GLP) closed up half a cent, or 0.27 per cent, at $1.825.

A DBS research note yesterday gave GLP a buy call as analysts cheered its announcement this week to acquire Hillwood Development's US distribution centres for US$1.1 billion.

A version of this article appeared in the print edition of The Straits Times on September 15, 2016, with the headline 'STI falls further on Fed rate, oil price fears'. Print Edition | Subscribe