BullsAndBears

STI falls on concerns over oil, credit quality

Offshore and marine plays as well as banking counters suffer brunt of investors' worries

Singapore shares kept sliding yesterday, with investors again unnerved by weak oil prices. Beleaguered offshore and marine plays took another beating, and banking stocks were also sold down amid fears over credit quality.

The benchmark Straits Times Index (STI) made an upbeat start but quickly lost steam and kept falling to close 16.56 points or 0.63 per cent lower at 2,603.4. In all, 1.12 billion shares worth $1.01 billion were traded in the bearish session.

Markets in Greater China were also grim; Shanghai nosedived 6.41 per cent and Hong Kong slid 1.58 per cent. With China's vast manufacturing economy struggling, the February purchasing managers' index is expected to show further contraction, analysts' forecasts in a Reuters poll showed. The data will be out next Tuesday.

Overnight, the Dow Jones Industrial Average rose 0.32 per cent after a late rally as investors welcomed a brief recovery in the oil price. But the upturn did not hold yesterday, and the crude benchmark Brent futures dipped below US$34 per barrel again.

Unsurprisingly, Sembcorp Marine lost the most among the 18 STI constituents that fell, highlighting a selloff bias towards marine and energy plays in the down-cycle.

Sembcorp Marine slumped 8.5 cents or 5.43 per cent to $1.48, its fourth day in the red. Sembcorp Industries shed 10 cents or 3.8 per cent to $2.53. Keppel Corp pared four cents or 0.79 per cent to $5.01.


ST GRAPHICS

DBS Group lost five cents or 0.37 per cent to $13.35, OCBC dropped 18 cents or 2.24 per cent to $7.84, and United Overseas Bank shed 20 cents or 1.18 per cent to $16.81. The local banks are commonly seen as a bellwether for economic conditions and corporate sector performance. Their exposure to struggling corporate borrowers, particularly in the oil and gas sector, is worrying market watchers.

Moody's senior credit officer Eugene Tarzimanov said in a note yesterday: "We expect that the asset quality of all three banks will continue to deteriorate because of slowing economic and trade growth in Asia, and increasing stress for oil and gas borrowers in Singapore."

Property-related STI counters fared better. CapitaLand Mall Trust was up five cents or 2.43 per cent to $2.11, and CapitaLand gained two cents or 0.7 per cent to $2.88.

Ascendas Real Estate Investment Trust rose one cent or 0.43 per cent to $2.35, and CityDev put on five cents or 0.71 per cent to $7.09 after unveiling record earnings of $410.5 million for the Dec 31 quarter.

Outside the STI, Yuuzoo Corp was a top active penny play, up 0.3 cent or 1.81 per cent to 16.9 cents, on 49.6 million shares traded.

Spackman Entertainment lost 0.7 cent or 5.22 per cent to 12.7 cents, with 143.1 million shares traded. Shares of the film company have surged since the middle of the month, and punters may look to take profit soon.

A version of this article appeared in the print edition of The Straits Times on February 26, 2016, with the headline 'STI falls on concerns over oil, credit quality'. Print Edition | Subscribe