STI ends volatile week 7 points lower at 2,649.38
OVER the course of the past five days, trading in the Straits Times Index was directed mainly by external considerations, namely oil prices, the Dow futures and China. All three rarely moved in tandem with each other, making for a volatile week here - the STI rose on Monday and Tuesday, fell on Wednesday and Thursday, then rebounded on Friday.
The net outcome was that the index recorded a loss of seven points or 0.3 per cent over the week at 2,649.38 - even with Friday's 45.98-point jump.
Perhaps more importantly, the majority of daily dollar volume was done in the 30 STI members. On Friday, when 1.2 billion units worth S$1.08 billion were traded, S$688.5 million or 64 per cent came from index components.
Over the week, banks led the index on its travels as analysts grappled with the sector's latest earnings figures. Most have concluded that this year will be tough for banks, given the weakness in the offshore and marine sector that will necessitate higher write-offs and provisioning.
Macquarie Warrants (MW) in its Friday daily said that Macquarie Equities Research (MER) thinks there is little reason to be bullish on banks this year.
"At the early stage in the credit downcycle, banks are often in denial and behind the curve even when the asset quality reality has already turned," said MW, quoting MER.
"With the credit cycle turning, risks of dislocations in fixed income, currency and commodities markets and China as a root for volatility, MER sees little reason to be bullish on banks in 2016. MER has a very strong preference for defensive and quality banks. While valuation levels of Singapore banks start to look attractive, it is difficult to turn bullish on these names given a business strategy that is still focused on growth and not on cost control and de-risking," MER said.
Commodities firm Noble Group was in focus after it issued a profit warning and then followed this up by reporting a US$1.67 billion loss for 2015. While the company maintained that it remains financially healthy and highlighted its cash flows, self-styled whistle-blower Iceberg Research issued its fourth report on the company entitled How Credibility Collapsed, which traced Noble's slide from blue chip to one described by Iceberg as fighting for survival. Over the week, Noble's shares slipped S$0.01 to S$0.355.
Among the other events of interest was the odd case of trading in the shares of Dyna-Mac. In the final seconds of trading on Monday, the stock closed at S$19.78, up S$19.653 or 15,474 per cent. This follows a similar incident on Feb 2 when the stock traded at S$20 or a gain of 14,500 per cent.
On both occasions SGX cancelled the trades, and after Monday's episode, the exchange issued a statement reminding member firms that in the interest of an orderly market, their trading representatives and clients should withdraw orders where the prices are clearly not in line with market prices.
"Market participants should also not take advantage of any pricing error in share counters as SGX is closely monitoring the market and will cancel transactions which we deem to be error trades. There is therefore no commercial benefit for a participant putting in orders at these erroneous prices," said the exchange.
