STI bucks regional trend and falls

Singapore shares bucked the trend among Asian markets yesterday when the Straits Times Index (STI) declined 3.78 points or 0.12 per cent to 3,220.56, while its regional peers mostly ended green, appearing to have already priced in weaker growth expectations from China.

Key indices in Japan, China, Hong Kong, India, Australia, Malaysia and Indonesia rose unanimously, despite news in the morning that China's economic growth had dropped to its slowest annual rate since 1990, as the Sino-US trade war hit consumer sentiment and capital expenditure. China registered full-year growth at 6.6 per cent, down from 6.8 per cent in 2017.

Mr Hussein Sayed, chief market strategist at FXTM, said: "The slowdown in China's economy will not impact this sentiment much unless a negative update on US-China trade negotiations is received. The release of Chinese GDP (gross domestic product) figures... was not a surprise, and this has been factored into asset prices."

He said US President Donald Trump had said over the weekend that there has been progress towards a deal with China, and markets are trending towards believing that negotiations are moving in the right direction.

CMC Markets analyst Margaret Yang also thought the STI is challenging a resistance level at around 3,225, following its longest bull strike in more than a year. Early yesterday, she commented that the index shows signs of being overbought, and that there could be some profit-taking at current levels. This comes as the releases of fourth-quarter corporate earnings are picking up momentum and gradually painting a clearer picture of the economic outlook.

IG Asia market strategist Pan Jingyi agreed she would be cautious in trading the short-term uptrend - not just for the STI, but also the Hang Seng index - from a technical perspective as prices approach resistance.

On the Singapore bourse, about 1.79 billion shares worth $916.71 million in total changed hands. Gainers outnumbered losers 207 to 183.

During the day, the STI traded above its last closing for most of the session before tanking abruptly an hour before the closing bell to 3,220.56. Sectors that traded lower included construction, commerce, properties and mining/quarrying.

Penny stocks dominated volume trading. Among the most active counters were JCG Investment, which finished flat at $0.003; Rex International, down 0.1 cent to eight cents; and Ezion Holdings, flat at $0.053.

Other actives include Genting Singapore, up two cents to $1.10, and LionGold, flat at $0.001.

Jardine-related companies, property developers and financial institutions featured among the steepest decliners. Shares of Jardine Cycle & Carriage fell 1.6 per cent to $36.46; Jardine Matheson fell 0.4 per cent to US$66.58 (S$90).

DBS Bank retreated 0.5 per cent to $25.01, while United Overseas Bank lost 0.4 per cent to $26.43.

City Developments fell 1.6 per cent to $8.84, while UOL lost 1.2 per cent to $6.61.

This followed news over the weekend that three condominium projects - the first launches this year - saw over one-third of their released units sold.

Observations from analysts were mixed, ranging from describing the results as "very, very cautious" sentiment, to optimism that there is still demand after cooling measures.

Singapore banks are expected to serve up lukewarm results in the coming earnings season, as higher net interest margins offset a slowdown in yield expansion and loan growth.

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