Bulls And Bears

STI weighed down by banks

Fed news fails to spur market; index dips amid weak showing by UOB, OCBC and DBS

Local shares sank yesterday as money continued to sit on the sidelines despite the United States Federal Reserve doing exactly what everyone expected.

Turnover was mediocre, with just 2.2 billion shares worth $1.08 billion changing hands while the losers outnumbered gainers at 302 to 148.

Overnight, the US Fed hiked its target interest rate by a quarter percentage point in line with expectations, and signalled it would gradually taper its balance sheet starting this year. But even as the Dow Jones Industrial Average shrugged off the Fed's hawkish tone to notch a fresh high, the benchmark Straits Times Index fell 21.34 points or 0.66 per cent to end the day at 3,232.09, thanks in part to the banks.

A weaker performance by UOB knocked 7.5 points off the index while OCBC's reduced it by 3.8 points and DBS by 3.7 points.

Hutchinson Port Holdings Trust (USD), which rose 2.5 cents or 5.88 per cent to 45 US cents during the day, added two points to the index and was also the second most actively traded stock for the day.

Property developer World Class Global, a spin-off from jeweller Aspial Corp, made its debut on the Catalist board, opening at 27 cents and touching a high of 28 cents before closing at 27.5 cents, a gain of 5.77 per cent from its offer price of 26 cents. The initial public offering comprised 136 million new shares and vendor shares that were 2.1 times subscribed.

Construction group Ley Choon, which reported an earnings turnaround at the end of last month, was yesterday's top active with 98.3 million shares traded. It finished 0.1 cent or 2.56 per cent higher at four cents.

LifeBrandz, which jumped 45.45 per cent on Wednesday before calling for a trading halt, was the day's third most actively traded stock once trading resumed yesterday, ending unchanged at 4.8 cents.

Responding to a Business Times report yesterday that rumours of a potential reverse takeover had revived, the lifestyle and entertainment firm said it was not aware of any reason for the unusual trading activity.

LifeBrandz added that it has gone through some restructuring recently, with the appointment of a new executive chairman and chief executive last month, and is "cautiously exploring business opportunities to position and transform its business direction".

Meanwhile, engineering services firm ISDN rose one cent or 4.44 per cent to 23.5 cents after UOB KayHian initiated coverage with a 35- cent target price.

"Despite strong growth and net cash representing 29.2 per cent of market cap, this laggard play is trading at much lower valuation than peers," analysts Edison Chen and Yeo Hai Wei wrote in a report. "With its motion control and specialised engineering solutions, ISDN is well positioned to ride the wave of Industry 4.0 which focuses on automated manufacturing."

A version of this article appeared in the print edition of The Straits Times on June 16, 2017, with the headline 'STI weighed down by banks'. Print Edition | Subscribe