the singapore exchange ends lower on greek fears and short attacks 215442015

Trading on the Singapore stock exchange was marked by low volumes and listless investor sentiment following the holiday on Monday on Wall Street and the ensuing Chinese New Year holidays on Thursday and Friday. Stocks were negatively impacted by the continuing uncertainty on Greece’s debt negotiations, and fresh fears regarding the accounting practices followed by South Asian companies, following short attacks on certain Singapore companies.

Indices and sectors

The Straits Times Index (STI) ended 11.25 points lower or -0.33 per cent to 3,415.91, taking the year-to-date performance to +1.51 per cent. The FTSE ST Mid Cap Index gained +0.07 per cent, while the FTSE ST Small Cap Index declined -0.23 per cent.

The SGX traded 955.1 million shares valued SG$935.8 million. Losers outnumbered gainers by 227/175.

Amongst the FTSE ST sectors, the top gainers were utilities (+0.45 per cent), maritime (+0.16 per cent) and real estate investment trusts (+0.07 per cent). The biggest losers were basic materials (-1.24 per cent), healthcare (-1.17 per cent) and technology (-1.06 per cent).

Stocks

According to a Bloomberg report, Noble Group Ltd (SGX:N21) has denied allegations that it misled investors over an asset sale and that its management believed the company’s value is properly reflected on its balance sheet. “The Board of Directors and the management are comfortable that the Group’s balance sheet fairly presents its book value under IFRS,” the company said in a statement filed with the SGX, in response to charges of accounting improprieties by Iceberg Research. “The carrying values of our associates, including Yancoal, are tested for impairment using discounted cash flow models that are updated every quarter,” it added. “As is always the case these valuations are currently being audited as part of the FY2014 audit.”

Noble also said that Iceberg was an unknown entity and that it found no address or former contact details, that the author(s) were anonymous, and that the latter did not “air their concerns with the management of the Group prior to publication.” Noble’s shares ended down 5.41 per cent to SG$1.05 yesterday on heavy volume, as the market feared that it was the subject of short attack similar to the one by short seller Muddy Waters on Ocean Sky International Ltd (SGX:O05) in 2012.

Sound Global Ltd (SGX:E6E) and Ozner Water International Holding Ltd (HKG:2014) are two other Singapore companies whose shares have tumbled following allegations of accounting irregularities. Collectively, these two companies, along with Noble, have lost over US$1 billion in market capitalisation, said the Straits Times.

Troubled shipping line Neptune Orient Lines Ltd (SGX:N03) announced that it has agreed to sell its APL Logistics Ltd business to Japanese company Kinetsu World Express Inc. for SG$1.2 billion, according to Ship & Bunker. "This is a strategic move that will allow us to focus on improving our liner shipping business, while at the same time enabling APL Logistics to grow," said NOL's Group President and CEO, Ng Yat Chung. "The transaction will also strengthen our balance sheet and unlock value for our shareholders."

Southeast Asia’s largest property developer, CapitaLand Ltd (SGX:C31) said its profit after tax and minority interests rose sharply by 187 per cent during the fourth quarter of 2014 to SG$409.4 million from SG$303.3 million in the year prior period as a result of improved operating performance from its shopping mall business and development projects in Vietnam and profit from the sale of Westgate Tower as well as lower funding costs, according to Global Post.

SembCorp Industries Ltd (SGX:U96) said in a news release yesterday that its net profit for the financial year 2014 was up 3 per cent from the previous year to SG$801.1 million (excluding significant items accounted in 2013), while turnover achieved was SG$10.9 billion. “Strategically positioned in key emerging markets, we continue to expand our energy and water businesses," said Group President and CEO Tang Kin Fei. "In February, we accelerated our growth in the renewable energy sector with our acquisition of Green Infra, a leading renewable energy group in India. With investments in both thermal and renewable energy, Sembcorp is well-positioned for growth in the energy sector with a balanced portfolio of energy assets.”

Ocean Sky International Ltd (SGX:O05) warned that it expected to report a net loss for the 2014 financial year mainly due to “finalisation of claims on warranties from Sunny Force in relation to the disposed apparel operations, which were offset, to a large extent, by fair value gain on investment property,” according to the Straits Times.

PACC Offshore Services Holdings Ltd (SGX:U6C) said net profit during the 12 months to December 31 fell 27 per cent to SG$66.5 million due to low utilisation of vessels and higher operating costs in “a challenging operating environment impacted by the sharp decline in oil prices.”

Economic news, currency and insight

In an interview with 938LIVE, Singapore Minister for Trade and Industry Lim Hng Kiang said the economy was falling behind in productivity even though it grew reasonably well at a “new normal” for 2014, according to an article in Channel News Asia. Singapore’s labour productivity declined by 0.8 per cent in 2014, according to data released yesterday, the third successive year in which the economy reported falling productivity.

In other comments the Minister said that globally, only the US economy was faring well. “Europe and Japan are having a big challenge and China is managing to have a soft landing at best,” he said. “So the external environment is at best slightly better than last year, not that much better.”

The Minister also said the economy would benefit from lower oil prices, as well as the weaker Singapore dollar, following the recent monetary easing by the Monetary Authority of Singapore. "Lower oil prices, we think its net plus for the economy, because we are an oil importing country, it’s a net plus for the businesses because electricity prices will come down, transport prices will come down,” he said on the interview. “So businesses will do much better their input costs will come down."

According to data from Singapore’s Ministry of Trade and Industry, services as a share of the economy’s total trade jumped from 19.7 per cent in 2004 to 26.7 per cent in 2014, while their percentage of total exports rose from 16.9 per cent to 35.5 per cent in the same period. The Ministry said that henceforth, quarterly data on exports and imports will include data on services in addition to that on goods.

According to data from Singapore’s Ministry of Trade and Industry, the economy grew 2.9 per cent in 2014, better than an estimate of 2.8 per cent, but much slower than the 4.4 per cent expansion achieved in 2013, said the Straits Times. The data showed that growth in manufacturing improved from 1.7 per cent in 2013 to 2.6 per cent in 2014, although growth in the construction and services industries moderated.