STI inches lower, ending 2 days of gains
US rate hike in September cannot be ruled out yet, although most expect the tightening to happen in December
SHARES on the local bourse let up their past two days of rousing gains to end Wednesday's trading on a wimpish note, although the US dollar tumbled - a good thing for Asian markets, generally - and US stocks climbed modestly overnight.
The key Straits Times Index closed lower by 2.9 points or 0.10 per cent at 2,893.65. The good news is that it managed to stay in positive territory for the year - up 0.4 per cent so far.
Major Asian benchmark indices finished lower as well with Japan's Nikkei 225, hit by a soaring yen, leading the pack with a 0.4 per cent fall.
South Korea's Kospi and Hong Kong's Hang Seng fell 0.2 per cent while China's Shanghai Composite Index closed flat.
The greenback slid on lower expectations of an imminent rate hike by the Federal Reserve following a weak payrolls report and the non-manufacturing activity index which fell to its lowest level since February 2010. These in turn have renewed concerns on the health of the world's largest economy.
Even so, the probability of a rate hike in September cannot be altogether ruled out although most expect the tightening to happen in December.
"Let's take a little step back," said Nicholas Teo, KGI Fraser Securities trading strategist.
"It should be noted that seasonally, the summer months of August and September have showed similar down ticks in the past, only to recover as we hit into the year-end Autumn proper.
"Whether this scenario will be played out in comparable fashion later this year, nobody knows. Thus, it remains premature for anyone to write off a September hike at this juncture," said Mr Teo.
Meanwhile, S-Reits drew some positive attention with S&P Global Ratings saying that they were better positioned to withstand potential increases in interest rates given their stable cash flows, lower leverage, and generally high proportion of unencumbered assets.
"The dominance of large players in Singapore's real estate industry should provide some cushion to absorb downside risk in the domestic bond market," said its credit analyst Kah Ling Chan in a report on the liquidity risk of Singapore's real estate sector which form nearly half of over S$10 billion corporate bonds maturing by end next year.
The FTSE ST Reit closed up 0.34 points.
Turnover on the local bourse stood at 1.3 billion shares worth S$948 million versus Tuesday's 1.4 billion shares worth S$1.3 billion.
Gains in banking stocks curbed the losses with DBS up 12 Singapore cents at S$15.55, UOB gaining 3 Singapore cents to S$18.68 and OCBC inching up 2 Singapore cents to S$8.84.
Singtel and Noble which were actively traded closed unchanged at S$4.03 and 14 Singapore cents respectively.
Vallianz Holdings jumped 0.2 Singapore cent or 10.5 per cent to 2.1 Singapore cents on Wednesday following a two-day trading halt. The offshore engineering firm has proposed a S$144 million rights cum warrants issue to strengthen its financials.
Asiatravel.com Holdings gained 0.4 Singapore cent or nearly 3 per cent to 15.4 Singapore cents.
The online travel firm said on Tuesday night that it was keeping its options open and has reserved its rights under a S$100 million placement agreement with its majority owner Zhonghong Holding.
China Minzhong Food Corp jumped 17.5 Singapore cents or 18 per cent to S$1.135. A company controlled by Indonesian billionaire Antoni Salim has offered to acquire the mainboard-listed vegetable processor at S$1.20 apiece.
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