STI loses steam as sentiment dips

INVESTORS in Asia were weighed down by sentiment that the Chinese government could slow the pace of policy easing following better-than-expected economic performance.

The market is viewing the developments with a hawkish tinge following a week of robust Chinese data, observed Stephen Innes, SPI Asset Management's managing partner and head of trading.

On Tuesday, Singapore's Straits Times Index (STI) closed at 3,353.47, down 4.23 points or 0.13 per cent. Elsewhere in Asia, markets were mixed. Of the lot, China's Shanghai composite Index added to Monday's dip, closing at 3,198.59, down 16.45 points or 0.5 per cent.

In Singapore, trading clocked in at one billion securities, 79 per cent of the daily average over the first three months of 2019. Total turnover came to S$886.18 million, 87 per cent of the January-to-March daily average.

IG market strategist Pan Jinyi said: "I would not read too much into the performance today (Tuesday) with low volume trading in the local market as investors were likely to have stayed on the sidelines awaiting fresh impetus to trade."

Across the market, decliners outnumbered advancers 228 to 165.

Bucking the trend on the day were the oil and gas, and offshore and marine sectors. Sembcorp Industries (up three Singapore cents or 1.1 per cent to S$2.76), SembMarine (up eight Singapore cents or 4.7 per cent to S$1.79) and Rex International (up 0.2 Singapore cent or 2.5 per cent to 8.1 Singapore cents) outperformed the benchmark index.

The counters were given a lift by an oil supply squeeze that sent black gold to new six-month highs during the Asian session. This came after the US formally announced the end of Iran sanction waivers from May 1.

Oil prices may yet increase with Iran threatening to blockade the Strait of Hormuz in order to stop the flow of seaborne oil exports from the Middle East.

Fifteen of the STI's 30 components ended the trading day in the black. Among them, Thai Beverage Public Company was the blue-chip index's most traded for the second session running. The food and beverage player closed 0.5 Singapore cent or 0.6 per cent up at 83.5 Singapore cents with 44.96 million shares changing hands.

Capitaland shares slid 10 Singapore cents or 2.8 per cent to close at S$3.54. Brandon Leu, vice-president of equities and financial products at UOB Kay Hian, said that investors were "probably selling off the real estate player's shares after booking the dividends as CapitaLand trades ex-dividend today (Tuesday)".

CapitaLand said on Tuesday that it was divesting its self-storage business StorHub for S$179.5 million.

The local banks were mixed on Tuesday. DBS Group Holdings closed three Singapore cents or 0.1 per cent down at S$27.42. OCBC Bank finished five Singapore cents or 0.4 per cent higher at S$11.83 and United Overseas Bank added three Singapore cents or 0.1 per cent to end at S$26.99.

A trader told The Business Times that the local banks and big-cap index stocks were already trading at "toppish" levels after their rally this year, which could explain why some investors took to booking profits. "I anticipate that more investors will be exiting positions in May," he added.

In a note to clients on Tuesday, Bank of Singapore's head of investment strategy Eli Lee said that following the stock rally this year, the private bank is "growing more circumspect about the market's risk-reward at this juncture as equity valuations appear less attractive while risks over Sino-US trade and global growth continue to linger in the background".

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