S'pore stocks dip despite oil kick

Singapore shares lost ground yesterday despite a hopeful start inspired by higher oil prices.
PHOTO: The Straits Times

Singapore shares lost ground yesterday despite a hopeful start inspired by higher oil prices.

The benchmark Straits Times Index slipped 3.56 points, or 0.13 per cent, to 2,793.99.

Some 1.73 billion shares worth $1.26 billion changed hands across the bourse.

Traders are waiting to see non-oil domestic export data due out today, with further weakness expected for Singapore shipments.

Sembcorp Marine rose 2.5 cents or 1.9 per cent to $1.35, after announcing on Tuesday it has entered into a deal to sell its 30 per cent stake in Cosco Shipyard Group Co for 1.06 billion yuan.

OCBC Investment Research analyst Low Pei Han noted the divestment will mean Cosco Shipyard's poor performance becomes less of a drag on SembMarine's results.

But she maintained a "sell" call on the stock with a fair value estimate of $1.13, citing the potential impact of SembMarine's removal from the MSCI Singapore index in the latest review, as most funds are benchmarked to MSCI indices.

Offshore services firm Mermaid Maritime shot up 1.5 cents or 12.6 per cent to 13.4 cent in heavy trade, likely on market rumours of a privatisation bid.

Read also: Trump is US President: 8 things Singapore investors need to know right now

DBS Group Research in a report maintained its "hold" call on the stock, noting that the company remains a candidate for privatisation by majority shareholder Thoresen Thai and its promoter group, which together control 77 per cent of the outstanding shares.

It added that Mermaid is a "relatively safer" stock compared with those facing distress, as it continues to generate positive cash flows and has low net gearing with no bonds outstanding.

Food and beverage group BreadTalk Group drew a trading query from the Singapore Exchange in the afternoon, after jumping more than 6 per cent. It rose five cents or 4.8 per cent to close at $1.09.

Former entertainment group LifeBrandz requested for a trading halt on its shares before the market opened yesterday, "pending (the) release of announcements".

The group's auditors last month flagged concern over its ability to continue as a going concern.

Commodity trader Noble Group was the top active, sliding 0.3 cent or 1.6 per cent to 18 cents on 133.9 million shares done.

Regional markets were mixed.

Tokyo rose 1.1 per cent on a weaker yen, Shanghai pared 0.06 per cent and Hong Kong shed 0.19 per cent.

Read also: What a Trump win means for Singapore

KGI Securities (Singapore) trading strategist Nicholas Teo noted that global bond markets earned a brief respite overnight, after being pummelled over the last few days.

"Bonds are signalling (interest) rates will be hiked in December. Furthermore, with the selection for the 45th United States president now sorted out, the Fed has a clear passage now to hike on Dec 14 without any political baggage in tow," he said.

"Almost one year ago, bond markets were similarly as jittery. Yields rose in anticipation of the Fed's first hike in seven years, which subsequently happened in December."

Mr Teo added: "How things will play out this time around, only time will tell. Firstly, however, it would be good to see a little more calm return to the bond markets, and to the US dollar."

Things Singapore investors need to know after Trump's win

  • Donald Trump (shockingly) won the US election. As far the financial markets are concerned, here are eight things that all Singapore investors should know about.
  • 1. Gold price is going up: Trump's victory has already seen a flight towards gold, as investors seek safe haven for their money.
  • 2. Uncertainty will cause sell-off, stock markets will drop: Investors, both institutional and retail, hate uncertainty, and that uncertainty is going to cause sell-off, leading to price drop across global equity markets.
  • 3. Panic leads to opportunity?: Remember the famous Warren Buffet quote, "be fearful when others are greedy, and greedy when others are fearful"? Well, you can now put this to the test.
  • 4. Watch the US Dollar close: While the popular sentiment is that the USD is going to depreciate as a result of Trump's victory in the short-run, the long-term performance of the USD is very much subjective still.
  • 5. Look out for local companies that deal heavily in US contracts: The uncertain future of the USD will be one to keep watch on, particularly for investors who own local stocks that have their contracts in USD.
  • 6. Bonds to be in demand again: With investors fearing that Trump's election will bring global uncertainty, prices of treasury bonds across the globe has seen a spike in price.
  • 7. High quality dividend stocks might be in play: There are many good local blue-chip companies that have been through recessions after recessions. They still continue to do well till today. Stick to them.
  • 8. Avoid panicking: The stock market is full of ups and downs, as it fluctuates largely based on human emotions.
  • We have already seen a shocking poll result earlier this year when the UK voted to exit the EU. As expected, markets sell-off were immediate. But life still have to go on. We still have to invest for our future and our retirement.

tsjwoo@sph.com.sg


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