Blue chips in play as STI falls 2.98%

SOME market watchers have started to bandy about predictions as wild as the Straits Times Index (STI) hitting 2,000 points in the near future so it is perhaps cold comfort to investors here that the local market is not so far gone yet.

But as a stunning rout in global equities drags on, local stocks have continued to touch fresh lows almost on a daily basis and Wednesday proved to be another tragic variation on the now-familiar semi-apocalyptic theme.

The Singapore stock market tumbled 3 per cent in the session, with the STI plummeting 78.7 points or 2.98 per cent to 2,559.77, its lowest level since dropping to 2,528.71 points on Oct 5, 2011 - more than four years ago. Though the STI had rallied on Tuesday, that temporary relief might as well have been a mirage in the desert.

The broad market told a similar tale. Losers outnumbered gainers 355 to 79, or about nine down for every two up.

Blue chips were in relatively heavy play on Wednesday - about 1.09 billion shares worth S$1.22 billion in total changed hands, which worked out to an average unit price of S$1.12 per share - and took substantial damage.

Notably, juggernaut Singtel was among the most active counters on Wednesday, suffering a 2.3 per cent, or S$0.08, drop to S$3.42 on 27 million shares traded.

Apart from that, the local banks were also major drivers of the STI's descent, with all three shedding between 2.7 per cent and 3.3 per cent in the day.

The usual culprits for the decline can be pinpointed: renewed fears over China's economy partly due to suspicion over Chinese official economic figures, and an ongoing crude oil slump that has seen Brent slide below US$28 per barrel and stay there.

One of the biggest losers in the STI basket was utilities group Sembcorp Industries, which plunged a dramatic 9.4 per cent, or S$0.24, to S$2.30 on roughly 15 million shares changing hands.

Rigbuilder Keppel Corp also had a fairly bad day, retreating 6.8 per cent, or S$0.35, to S$4.83. Its rival Sembcorp Marine, though, somehow inched up half a cent to S$1.485.

Sembcorp Marine and its parent Sembcorp Industries were in relatively active trading on Wednesday morning following rumours that Sembcorp Industries might be eyeing a full takeover of Sembcorp Marine amid depressed offshore industry and stock market conditions.

Nomura had said in a Jan 19 report that it had cut its target price for Keppel Corp by 11 per cent to S$5.05 and by 14 per cent for Sembcorp Marine to S$1.78, and it already appears to be among the more optimistic analysts. Maybank Kim Eng said, also in a Jan 19 note, that its target price was S$4.24 for Keppel and just S$1 for Sembcorp Marine.

"Keppel Corp should still be able to maintain positive free cash flows in FY16-17E, thanks to its diversified income sources. On the other hand, we expect Sembcorp Marine's free cash flow to turn negative in FY16 and only slightly positive in FY17," Maybank Kim Eng said.

The most actively traded counter was offshore firm Ezra Holdings, which fell S$0.012 to S$0.058 with 98.7 million shares changing hands after the group announced a share consolidation. Other actives included doubly-junked commodities trader Noble Group and China Sports International.

Elsewhere, Singapore Post dropped three cents, or 2 per cent, to S$1.49, after it announced on Tuesday that it would appoint PricewaterhouseCoopers - its external auditor for some time - as its special auditor for a corporate governance investigation.

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