No market fuel from weak energy prices

THE jittery Chinese markets showed some signs of calm yesterday but local shares extended their losses as wary investors eyed tumbling energy prices.

Brent Futures remained at around US$31.5 (S$45) per barrel, triggering further sell-offs, particularly in the offshore and marine-related sectors here.

That left the benchmark Straits Times Index down 17.07 points or 0.63 per cent to 2,691.78, with 1.73 billion shares worth $923.1 million changing hands.

Keppel Corp pared 39 cents or 7.04 per cent to $5.15.

Keppel shares have dropped about 21 per cent since the start of the year.

Sembcorp Marine also stumbled, shedding 6.5 cents or 4.13 per cent to $1.51.

The rig builder, which has been in a contract dispute with Marco Polo Marine since November last year, may face further headwinds amid rumours that major Brazilian client Sete Brasil is set for imminent bankruptcy.

"Sete Brasil projects account for 38 per cent of Keppel and SembMarine's outstanding order book. Profit reversal and impairment is inevitable in the event that Sete Brasil files for Chapter 11," DBS Group Research analysts warned in a note yesterday.

Smaller offshore marine counters were also hammered.

Ezra Holdings fell 0.6 cent or 7.06 per cent to 7.9 cents while Ezion Holdings dropped 0.5 cent or 0.88 per cent to 56.5 cents.

The outlook for oil prices will be mixed in at least the short term, Bank of America Merrill Lynch noted recently as it cut the bank's Brent average forecast for 2016 from US$50 previously to US$46 per barrel.

Meanwhile, banking plays continued to slide. United Overseas Bank dropped 21 cents or 1.15 per cent to $18.06. OCBC fell six cents or 0.72 per cent to $8.23 and DBS shed one cent or 0.07 per cent to $15.37.

On the other end of the ledger, Golden Agri-Resources was the top gaining blue chip for the second day, rising 1.5 cents or 4.23 per cent to 37 cents. Talk that unfavourable weather could impact palm oil production and bolster prices is lifting sentiment with 51.1 million of Golden Agri shares transacted yesterday.

Telco Singtel put on one cent or 0.28 per cent to $3.53 while StarHub closed up four cents or 1.13 per cent at $3.58.

Outside the tepid STI, some penny plays still generated market buzz. Luzhou Bio-Chem Technology rose one cent or 22.73 per cent to 5.4 cents, and LionGold Corp gained 0.1 cent or 20 per cent to 0.6 cent following a flurry of shareholding changes announced yesterday.

The mixed performance here yesterday came as the region tried to regain its breath after the recent free fall.

Shanghai eked out a 0.2 per cent gain, with investors encouraged by further stabilisation of the yuan.

But most other markets remained spooked. Hong Kong closed down 0.89 per cent, Tokyo dropped 2.71 per cent and Sydney pared 0.17 per cent.

whwong@sph.com.sg

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