singapore stocks end marginally lower as interest rate fears and dollar strength loom 306092015

Singapore stocks spent most of Tuesday trading sideways as investors digested the possibility of an interest rate hike in the US that could come sooner rather than later, and assessed the impact of the huge surge in the strength of the US dollar. However, a sharp sell-off commenced at 15:00 and dragged the benchmark STI index down to a low of 3,394.52, and a close of just a few points above that level.

Indices and sectors

The Straits Times Index (STI) ended 6.31 points lower or -0.19 per cent to 3,398.26, taking the year-to-date performance to +0.98 per cent. The FTSE ST Mid Cap Index declined -0.28 per cent, while the FTSE ST Small Cap Index declined -0.31 per cent.

The Singapore Exchange traded a volume of 1,166.5 million shares valued at SG$1,180.7 million. Losers outnumbered gainers by 250/174.

Amongst the FTSE ST sectors, the top gainers were healthcare (+1.71 per cent) and technology (+1.07 per cent). The losers were basic materials (-1.17 per cent), consumer services (-0.62 per cent), oil and gas (-0.45 per cent) and industrials (-0.41 per cent).

Stocks

Shares in Noble Group Ltd (SGX:N21) plunged 6.5 per cent to SG$0.935. The stock was the biggest loser on the STI yesterday. According to the Business Times, Noble is seeking nearly US$3 billion (SG$4.17 billion) in bank loans to refinance debt that is coming due in May, even as it contends with allegations of accounting improprieties by shadowy blogger and research firm Iceberg Research.

Nobel Design Holdings Ltd (SGX:547) revealed Tuesday that Bert Choong, former chief executive and chairman, has sued the current chairman of the company and three other directors alleging he was defamed in an announcement by the company on October 17. Mr Choong has begun legal proceedings against non-executive chairman AdrianChan Pengee, chief executive and managing director Terence Goon Eu Jin, chief operating officer Wee Ai Quey and independent director Teh Ban Lian, according to the Straits Times.

Singapore Exchange Ltd (SGX:S68) has held preliminary discussions towards the formation of a regional rubber exchange that would bring together the top three producing nations said Reuters quoting industry sources. According to the Reuters report, the exchange met last month with the International Tripartite Rubber Council, which comprises Thailand, Indonesia and Malaysia, and proposed several models for the regional exchange.

Separately, the Straits Times reported that the Singapore Exchange proposes to add the Taiwanese dollar and yuan crosses as new Asian currency futures contracts to its existing offerings in the third quarter of 2015, subject to regulatory clearance. "This is in line with global G20 regulatory reforms in the over-the-counter (OTC) derivatives sector to encourage trading on electronic platforms and exchanges, if appropriate," the SGX said.

According to a report by the FT, the Intercontinental Exchange (ICE) has postponed plans for the launch of its new Singapore platform after the Chinese bourse Zhengzhou Commodity Exchange (ZCE) threatened to take legal action to prevent ICE from launching two commodity futures said to be copies of contracts already offered in China. ZCE sent to ICE a “’cease and desist” letter regarding the introduction of cotton and sugar futures alleged to be similar to those already traded on the ZCE. According to the FT report, the China Securities Regulatory Commission also contacted the Monetary Authority of Singapore, Singapore’s regulatory authority, and requested the latter ensure these contracts were not introduced by ICE.

Analysts warn that prices of Singapore real estate investment trusts (REITs) could plunge by 9 per cent this year if the much feared interest rate hike US becomes a reality, says the Business Times. According to analysts at RHB Securities, DPU yields could jump from 5.9 per cent presently to 6.5 per cent if the US Fed starts to raise interest rates.

Shares in Ellipsiz Ltd (SGX:E13), a probe card distributor and service solutions provider serving the semiconductor, electronics manufacturing and telecommunication industries, were up 3.70 per cent to SG$0.112. Broking house UOB Kay Hian on Monday recommended the stock with a target price of SG$0.171, suggesting it was an attractive acquisition target, according to Business Times. "While Ellipsiz is now a shadow of its former self, the group continues to be held in high regards in the industry," UOB Kay Hian said in its research report.

CNA Group Ltd (SGX:5GC) fell 4.17 per cent to SG$0.023. The company announced Tuesday that it had secured SG$9.65 million worth of contracts during the period July 2014 to February 2015, according to the Business Times. The company said its current order book stands at SG$77.1 million.

Oversea-Chinese Banking Corp. Ltd (SGX:O39) has introduced a fingerprint recognition service for its mobile banking customers. Customers who use iOS devices that include Apple’s touch ID fingerprint sensors can now use OCBC’s OneTouch service to access their banking information by logging in after a fingerprint check, according to TODAY.

Economic news, currency and insight

Singapore’s Minister for National Development Khaw Boon Wan said yesterday that public housing flats had become more affordable in recent years and were now within the house buying budgets of many Singaporeans. Speaking at a parliamentary debate on his Ministry’s budget yesterday, he said the ministry had been successful in taming the red hot housing market, according to the Straits Times. "Every generation will be able to afford their own HDB homes. This is our promise," he assured.

The US dollar index is at an 11-and-half year peak following a strong jobs report released on Friday that raised expectations of an interest rate hike by the US Fed. The US dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, climbed yesterday by 0.85 per cent to 98.45, the highest since September 2003.

Fears of a rate hike took a huge toll on Wall Street stocks overnight. The Dow Jones Industrial Average fell 332.78 points, or 1.85 percent, to 17,662.94, the S&P 500 lost 35.27 points, or 1.7 percent, to 2,044.16, and the Nasdaq Composite dropped 82.64 points, or 1.67 percent, to 4,859.80. The Dow and S&P 500 have now turned negative for the year, according to Reuters.