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STI slips as investors stay wary

This article is more than 12 months old

Observer notes market seems to be in 'waiting mood for more data'

A news-heavy day meant that the Singapore market had a busy mid-week session on its hands.

The flurry of activity was attributed to a number of factors that weighed on investors' minds, market watchers said.

This resulted in a tussle between the bulls and bears, with the Straits Times Index (STI) finishing three points or 0.1 per cent lower at 3,367.8.

But news developments aside, "the market seems to be in a waiting mood for more data, such as tomorrow's US jobs report to assess the impact of the trade war and supporting evidence for the US Federal Reserve to initiate rate cuts", UOB Kay Hian trading representative Brandon Leu noted.

In Singapore, trading volume clocked in at 1.57 billion securities, 31 per cent over the daily average in the first five months of 2019. Total turnover came to $1.3 billion, 25 per cent over the January-to-May daily average.

Across the market, decliners outpaced advancers 205 to 188. Thirteen of the STI's 30 components finished in the red.

With 82.8 million shares traded, Genting Singapore was the blue-chip index's most traded, closing 2.5 cents or 2.7 per cent lower at 91 cents.

Investors took to selling the stock after a JP Morgan downgrade to "underweight" with a target price of 83 cents.

With central banks indicating or moving towards a dovish stance, real estate investment trusts (Reits) have benefited from increased investor interest, with prices at dear valuations.

Higher prices of units have not deterred Reit investors and Tuesday's news that the Monetary Authority of Singapore was mulling raising the current leverage limit of 45 per cent saw gains across Singapore Reits (S-Reits), with the iEdge S-Reit 20 Index adding 1.1 per cent.

A raise in the leverage limit might enable S-Reits to better compete against private capital and foreign Reits when making real estate acquisitions.

Much attention was on Sembcorp Marine (SembMarine) after Brazilian authorities executed a search warrant for its Brazilian subsidiary Estaleiro Jurong Aracruz. This led to a sell-off in shares of the offshore and marine company during yesterday's session.

Traders were unsurprised by the search warrant, with one saying "it was only a matter of time".

The trader added: "If the investigations do not hurt SembMarine greatly, the company will come back stronger. But for that to happen, SembMarine needs to win more contracts. If not, demand for its shares will remain weak. Funds need reasons to buy into the company."

SembMarine shares shed 13 cents or 8.4 per cent to close at $1.41.

Sembcorp Industries, which has a 61 per cent stake in SembMarine, finished six cents or 2.4 per cent down at $2.41.

The manufacturing and semiconductor sectors might face headwinds from Japan-Korea tensions, which could dent sentiment across semiconductor counters in the region.

"Japan's decision to curb exports of high-tech materials to South Korea could have a significant impact on electronics supply chains, not only in Korea, but also the region," DBS Group Research economist Ma Tieying said.

But the effect was muted as Venture Corporation shares dipped five cents or 0.3 per cent to $16.63, Hi-P International edged down one cent or 0.7 per cent at $1.43 and AEM Holdings closed at $1.06.

Yesterday's session also saw the debut of ST Group Food Industries Holdings on the Singapore Exchange's catalist board. The counter closed at 28 cents with 15 million shares changing hands, up two cents or 7.7 per cent from its initial public offering price. It holds exclusive regional franchise and licence rights for food and beverage brands such as Gong Cha.

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