external factors take a toll on singapore stocks 501872015

An overnight slump on Wall Street, and regional weakness in stocks triggered by China’s crackdown on margin trading, led to a decline in Singapore’s Straits Times Index on Monday. Fears of turmoil in Europe in case of default by Greece also played havoc with investor sentiments.

The index was on a downtrend from the opening hour of trade and reached a low of 3,497.36 by approximately 2:30 PM, and spent the rest of the session in more or less sideways trading.

Indices and sectors

The Straits Times Index (STI) ended 21.94 points or 0.62 per cent lower to 3,503.25, taking the year-to-date performance to +4.10 per cent. The FTSE ST Mid Cap Index fell 0.32 per cent, while the FTSE ST Small Cap Index fell 0.57 per cent.

The Singapore Exchange traded a volume of 2,599.6 million shares valued at SG$1,151.9 million. Losers outnumbered gainers by 343/151.

Amongst the FTSE ST sectors, the biggest losers were CataList index (-1.78 per cent), utilities (-1.65 per cent), consumer goods (-1.35 per cent), real estate holding and development (-1.22 per cent), basic materials (-1.18 per cent), telecommunications (-1.10 per cent) and fledgling (-1.00 per cent). The only sectors that ended with gains yesterday were healthcare (+1.77 per cent) and real estate investment trusts (+0.05 per cent).

Stocks

Representatives of Noble Group Limited (SGX:N21) will meet with the Securities Investors Association Singapore (SIAS) to allay the latter’s concerns that the company failed to address shareholders concerns at its annual general meeting on Friday, according to TODAY.

The SIAS is reported to have asked Noble to clarify feedback it received that Chairman Richard Elman played defensive and dodged questions from shareholders about allegations of improper accounting from Iceberg Research and Muddy Waters. According to TODAY, SIAS president and chief executive David Gerald said in a statement: “The concerns of shareholders were heightened by what these research reports revealed. The chairman could have given comfort to the anxious shareholders by answering in a manner, even briefly, acceptable to them. Much disappointment and anxiety could have been avoided by the chairman hearing out the shareholders. Shutting up the shareholders instead, only creates acrimony.”

Meanwhile, according to Business Times, the anonymous Iceberg Research commented on Elman’s attitude as follows: "In these amazing exchanges between a chairman and his own shareholders, we see that Richard Elman thinks he does not answer to anyone, not even to his own shareholders."

United Overseas Bank Ltd (SGX:U11) said Monday that it had entered into a financing agreement with Royal GK, a Singapore-based engineering procurement and construction (EPC) company set up to help meet Myanmar’s increasing demand for energy. Royal GK has won a contract from the Myanmar Central Power Company to procure gas engines for the construction of a gas-fired electricity power plant in Hlawga, Yangon, according to Channel News Asia.

“As Myanmar has prioritised the provision of power in the creation of new industries and job opportunities for the country, we are keen to finance companies such as Royal GK to help support the infrastructural needs of the country’s economic transformation,” said Mr Ian Wong, Managing Director and Head of Group Strategy and International Management at UOB.

Mapletree Logistics Trust (SGX:M44U) announced its distribution per unit fell 2.1 per cent in the fiscal fourth quarter compared to the prior year period due to higher borrowing costs and other trust expenses, according to TODAY. Distributable income to unit holders declined 1 per cent to SG$45.9 million during the aforesaid period, and as a result distribution per unit amounted to 1.85 cents, down from 1.89 cents a year ago. The trust manager said: “The global economic recovery remains uneven and Asia continues to grow at a slower pace. Demand for logistics space in the markets where MLT operates in remains stable but rental growth may be subdued.”

Singapore Exchange Limited (SGX:S68) announced that it had signed a memorandum of understanding with the Chengdu Municipal Finance Affairs Office (Chengdu FAO) to facilitate capital-raising by companies from the Chinese city in Singapore. The MoU was signed on the occasion of the 16th Singapore-Sichuan Trade and Investment Committee Meeting held in Singapore. “Chengdu and Sichuan with their geographical location and rich resources are poised for growth under China’s economic strategy,” said Lawrence Wong, Executive Vice President and Head of Listings at SGX. “SGX can play a pivotal role in enabling the growth of enterprises from this region by helping them connect with our pool of international investors.”

Starhill Global Real Estate Invmt Trust (SGX:P40U) said Monday that it intended to buy a freehold property located at 14-38 Rundle Mall, Adelaide, South Australia (Myer Centre Adelaide) for AU$288 million (SG$300 million) in cash, and accordingly entered a conditional sale-and-purchase agreement, according to Business Times.

Sino Construction Limited (SGX:F3V) plunged 35.94 per cent to SG$0.041. The company said Monday that a subsidiary had completed the construction of its first micro power plant in South Korea. Dubbed “Korea MPP One,” the plant is awaiting final inspection and certification from the Korea Power Exchange.

Economic news, currency and insight

The latest Singapore Index of Inflation Expectations (SInDEx), compiled by the Singapore Management University (SMU) in March, showed that inflation expectations in Singapore continued to trend lower, falling to a new 3.5 year low of 3.05 per cent, according to Business Times.

Dr. Aurobindo Ghosh, who co-created the SInDEx, said: "Despite a divergent but upbeat World Economic Outlook by the International Monetary Fund for 2015, low oil prices and fluctuating exchange rates are probably here to stay in the medium term…domestic factors such as the impending supply glut in COE (certificate of entitlement) quota and upcoming additional supply of accommodation, lower than expected pass-through costs despite tight labour market and medical subsidies have brought down the inflation expectations by Singaporeans in the current quarterly SInDEx survey."

AsiaOne reported that Sun Tongyu, one of the founders of Alibaba, was the purchaser of the SG$51 million penthouse at Le Nouvel Ardmore sold recently by Wing Tai. Adjusting for the roof terrace, the effective price works out to around SG$5,000 per square foot according to some property consultants. The penthouse has five bedrooms, family area and study area located on level 32, while a private pool, foyers, roof terrace, gym and an entertainment area are located on level 33.

In overnight trading on Wall Street, shares bounced back sharply as investors appreciated the moves by the Chinese to boost their economy by reducing banks’ reserve requirement ratio, as well as expectations of better earnings reports by US corporations, particularly technology companies, according to Reuters. The Dow Jones Industrial Average rose 208.63 points, or 1.17 percent, to end at 18,034.93, the S&P 500 gained 19.22 points, or 0.92 percent, to 2,100.4, and the Nasdaq Composite added 62.79 points, or 1.27 percent, to 4,994.60.