Bulls And Bears

STI suffers sell-off on geopolitical tensions

Situation in Korean peninsula, Sunday polls in France also lead to lower market turnover

Local shares finished sharply lower yesterday after investors sold off stocks because of rising tensions in the Korean peninsula and ahead of the French elections on Sunday.

The sell-off left the Straits Times Index (STI) down 0.98 per cent or 30.94 points at 3,138.30.

Turnover, which had hit two billion shares on some days last week, came to just 1.27 billion shares, with a total value of $743.5 million.

Some dealers on Fidelity National Information Services' SunGard systems had trouble connecting to the Singapore Exchange (SGX) yesterday morning. However, the issue was resolved after midday, with SGX saying that trading had continued as usual.

Meanwhile, markets continued to grapple with the fallout from the United States missile strikes in Syria and the dropping of a US bomb in Afghanistan but are "showing no sense of panic", noted DBS chief investment officer Lim Say Boon.

He said: "North Korea's latest missile test failed. Almost all of North Korea's trade is with China. So the market is betting this will be resolved without military force. Signs that China can do deals with Trump could give equities a relief bounce."

Commodity plays Golden Agri-Resources and Wilmar International dragged down the market. Golden Agri fell 2.7 per cent or one cent to 35.5 cents, while Wilmar lost 2.3 per cent or eight cents to $3.43.

The STI was also hit by falls at Yangzijiang Shipbuilding, which shed 2.6 per cent or three cents to $1.125; City Developments, down 2.1 per cent or 22 cents to $10.20; and StarHub, down 2.1 per cent or six cents to $2.83.

Marco Polo Marine lost 3.8 per cent or 0.2 cent to five cents, after it issued a profit warning and said it would seek refinancing and restructure its debt.

HL Global Enterprises plunged 31 per cent or 13.5 cents to 30 cents after its memorandum of understanding with Jingrui Properties, a unit of a Hong Kong company, expired as both parties failed to come to an agreement, said NRA Capital.

Japfa shares dropped 11 per cent or 8.5 cents to 72 cents, after CIMB Securities downgraded its call from "add" to "reduce".

"The operating environment has turned against Japfa, as it is facing strong headwinds in two of its biggest markets, Indonesia and Vietnam," CIMB said.

Although volume was thinner than usual, penny stocks continued to be actively traded. The most active counter yesterday was Chasen, which plunged 12.5 per cent or 1.3 cents to 9.1 cents, with 52 million shares traded. Artivision Technologies lost 9.5 per cent or 0.2 cent to 1.9 cents, with 48.2 million shares traded; Accrelist was flat at 0.7 cent, with 44 million shares traded.

BlackGold Natural Resources fell 11.5 per cent or 1.8 cents to 13.8 cents, with 41.3 million shares traded. Property firm HLH jumped 11.1 per cent or 0.1 cent to one cent, with 37 million shares traded.

A version of this article appeared in the print edition of The Straits Times on April 18, 2017, with the headline 'STI suffers sell-off on geopolitical tensions'. Print Edition | Subscribe