Triple whammy sends STI to below 3,200

Fears of China slowdown, underperforming banks, Fed hike uncertainty take toll on index

Fears of a deepening slowdown in China after the latest round of weak factory data, and bearishness over some local banking counters have sent Singapore shares slipping below the 3,200-point support.

The benchmark Straits Times Index (STI) closed 9.71 points lower at 3,192.79, with financials remaining under pressure owing in part to uncertainty over the timing of the United States interest rate hike.

United Overseas Bank shed 1.1 per cent or 24 cents to $21.96 after Credit Suisse downgraded its recommendation to "neutral", following the bank's underperformance in its second-quarter results. OCBC dipped 0.1 per cent or one cent to $10.28.

Another actively traded counter, Global Logistic Properties, fell 4.3 per cent or 10 cents to $2.20, with 84.8 million shares traded.

"I would expect some form of short covering to take place towards Thursday as short-traders will likely close out positions before the long SG50 weekend," said Phillip Futures analyst Howie Lee. "This is further compounded by the fact that the STI will have to sit through US non-farm payrolls (to be released on Friday) untraded... so short-traders will likely heed caution towards the end of the week."

The Noble Group continued to hog the most actively traded list yesterday. The commodities trader, which last week suffered the worst rout on its stock in six years, rebounded 8 per cent at the opening bell, but was not able to sustain the momentum. It closed 3.3 per cent or 1.5 cents higher at 47 cents, with 118.5 million shares traded.

The firm announced yesterday that it has been approached by several parties on potential financing and investment options. It also stressed it has ample funds to fund a US$735 million (S$1 billion) bond redemption due today, and reiterated that it has no liquidity problems. But since the start of the year, it has lost over 60 per cent of its value.

The company also announced its decision to push forward the release of its second-quarter earnings results by three days to Aug 10 - a holiday in Singapore - and to disclose more details on the valuation of its minority investment in Yancoal and inventory sales.

Meanwhile, negative leads from most of Asia weighed on Singapore.

Japan declined 0.2 per cent, while South Korea dropped 1.1 per cent. The Hang Seng China Enterprises Index of Chinese stocks traded in Hong Kong slid 1.1 per cent, while Hong Kong slipped 0.9 per cent and Taiwan slumped 1.6 per cent.

The Shanghai Composite headed for its lowest level since July 8, falling 1.11 per cent, while Shenzhen sank 2.7 per cent after a private Chinese factory gauge released yesterday fell to a two-year low last month. The Caixin final manufacturing Purchasing Managers' Index slipped to 47.8 last month, from a preliminary reading of 48.2. The official Purchasing Managers' Index fell to 50 last month, from 50.2 in June.

A version of this article appeared in the print edition of The Straits Times on August 04, 2015, with the headline 'Triple whammy sends STI to below 3,200'. Print Edition | Subscribe