STI falls 0.7%, breaks support level

TRACKING other Asian markets as they struggled through yet another day burdened by Chinese and Turkish economic woes, the Straits Times Index (STI) broke down a key support level and reached its lowest point since July 9 in Thursday's trading session.

After losing 22.19 points or 0.7 per cent, the index ended at 3,211.93, down from 3,234.12 the day before.

The previous support of 3,238.15 points is now expected to act as a resistance level, while the STI may go on to test the next support level of 3,170.21, said Reuters analyst Gaurav Dogra.

A total of 1.52 billion shares worth S$1.05 billion changed hands, compared with Wednesday's 1.44 billion shares for S$1.14 billion. Losers outnumbered gainers 256 to 158.

Shares of Thai Beverage (ThaiBev) lost another 1.5 Singapore cent or 2.2 per cent apiece to finish at S$0.665, continuing a slide triggered by news of its 61 per cent drop in Q3 profit. However, the company said on Wednesday evening that it remains optimistic about growth in the upcoming quarters and has plans to ramp up its Vietnam operations.

Analysts mostly share its optimism, with 10 out of 15 maintaining "buy" calls on the stock, according to Bloomberg. OCBC analyst Deborah Ong said ThaiBev's core Q3 2018 results were on the lower end but still within expectations.

"Over the longer term, we believe ThaiBev's recent expansions beyond its domestic market will continue to help drive growth," she said. "In particular, we see the Sabeco (Saigon Beer Alcohol Beverage Corp) acquisition as a strategic entry to a growing market that will bear fruits in time."

ComfortDelGro Corp also saw its share price dip to S$2.30, down 7 Singapore cents or 3 per cent. It announced after market close that investment management company BlackRock Inc on Tuesday reduced its stake in ComfortDelGro from 7.03 per cent to 6.98 per cent, while remaining a substantial stakeholder.

The transport giant still has reason for cheer, as it currently leads gainers on the STI this year with a 19.7 per cent gain as of Wednesday, Reuters' Mr Dogra noted. StarHub, down 42.1 per cent so far this year, is the top loser.

Turkey received hope of much needed relief on Wednesday with Qatar's Emir pledging to invest US$15 billion in the country, but more is needed to defuse the crisis, a team of DBS strategists said.

"It is important for the Turkish central bank to boost its FX reserves quickly and, hence, it remains to be seen how quickly these investments would flow into Turkey," they wrote in a morning note.

"From a markets perspective, we believe this issue could continue to affect sentiment until a more comprehensive solution is found, which would require de-escalation of tensions with the US as a starting point."

China is taking steps towards a similar solution to their own trade tensions with the US, as Chinese vice-commerce minister Wang Shouwen is set to meet US representatives from the Department of the Treasury later this month.

"This will be 'talks about trade talks'," Gai Xinzhe, an analyst at the Bank of China's Institute of International Finance in Beijing told Bloomberg. "Lower-level officials will meet and haggle and see if there is a possibility for higher-level talks."

While the yuan rallied on the news, FXTM chief market strategist Hussein Sayed noted that the equity market reaction was less hopeful.

"Most Asian equity indices remained in the red, suggesting that investors aren't confident that trade discussions will end successfully," Mr Sayed wrote in a report on Thursday.

"After all, the world's largest two economies seemed very close to reaching a deal in May but instead, both sides have been slapping tariffs on each other's imports since then."

For full listings of SGX prices, go to http://btd.sg/BTmkts