STI down 0.4% as growth worries return

The Singapore market returned to cautious trading yesterday, a day after tracking the US markets' brief rally to all-time highs on strong earnings.

The Straits Times Index (STI) closed down 0.36 per cent or 12.15 points to 3,350.28.

This came after key indices in the US struggled to sustain their rally and closed lower overnight, while a decline in business sentiment in Germany and weak growth data from South Korea reignited worries about global growth.

"Investors were dealt with another economic reality check as financial data from Europe remains as sick as ever, this despite a chorus of global central banks stimulus," SPI Asset Management's Stephen Innes said.

Turnover on the bourse was about 921.01 million securities worth $1.01 billion, which worked out to an average unit price of $1.10.

Losers outnumbered gainers 212 to 171.

AEM Holdings surged 10.48 per cent and topped active counters with 35.04 million shares traded, after the test-handling machine supplier announced yesterday morning that its sales orders received to date have surpassed the amounts announced in previous months. The counter climbed 11 Singapore cents to close at $1.16.

The company has received $209 million worth of sales orders as at April 25 for delivery in fiscal 2019. This is up from $174 million announced in March and $140 million announced in February.

Suntec Real Estate Investment Trust (Reit) was also heavily traded, with 27.28 million shares changing hands before it closed at $1.84, down 2.65 per cent or five Singapore cents. The Reit said yesterday morning that it had placed out 111.11 million new units to raise gross proceeds of about $200 million.

Cosco Shipping International (Singapore) Co picked up 8.7 per cent to $0.375 on 23.44 million shares after announcing plans to expand its business operations in Malaysia. It is looking to lease a piece of land in the port area of Port Klang where it will construct a 300,000 square foot warehouse.

Among active index counters, ThaiBev retreated 0.5 Singapore cent or 0.6 per cent to $0.835, and Singtel lost three Singapore cents or 0.95 per cent to $3.14.

Genting Singapore closed up one Singapore cent or 1.05 per cent to end at $0.965. The casino operator's shares have yet to recover from a plunge of more than 9 per cent on April 4, after an announcement that it would invest $4.5 billion to expand Resorts World Sentosa, and raise gambling taxes and casino entry levies.

Analyst Howard Klein, who publishes on investment research platform Smartkarma, called the negative market reaction "perplexing" in a report yesterday. He noted that Las Vegas Sands also announced plans to invest $4.5 billion to expand Marina Bay Sands at the same time, and saw its share price rise on the news.

Mr Klein disagreed with analysts who downgraded Genting on the basis that the entry fee and tax hikes would lower operating profit. While the higher fee might deter marginal customers, it is unlikely to be a primary reason for more serious gamblers to reduce their visits, based on observed gambler behaviour, he said.

"The tax rate reflects the overall health of the business and is never set in stone," he wrote.

"Singapore is a healthy jurisdiction which undoubtedly has provided the justification for raising the tax rate beginning in 2020. This is clearly based on government's appraisal that the revenue stream will continue to be sustained at its current level at the very least, or probably increase when the $9 billion investment by both operators debuts in five years."

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