singapore stocks give up early session gains as global cues weigh 1380472015

Singapore’s Straits Times Index traded higher and steady through Tuesday’s session, but gains were wiped out in the last two hours of trade as fresh fears emerged of a Fed interest rate hike, and investors preferred to be defensive given the uncertain outlook on global economic growth. Though the Chinese and Hong Kong markets helped prop up Singapore stocks early in trading, most of the subsequent damage was wrought by bearish cues from Wall Street futures. The ADB cut its growth outlook for developing Asia, and the S&P warned of higher funding costs.

Indices and sectors

The Straits Times Index (STI) ended 13.8 points or 0.48 per cent lower at 2,868.47, taking the year-to-date performance to -14.76 per cent.

The FTSE ST Mid Cap Index gained 0.08 per cent, while the FTSE ST Small Cap Index declined 0.11 per cent.

The Singapore Exchange traded a volume of 1,474.3 million shares valued at SG$1,046 million. Losers outnumbered gainers by 212/192.

Amongst the FTSE ST sectors, the gaining sectors included utilities (+3.86 per cent), consumer goods (+1.50 per cent), technology (+1.40 per cent), China top index (+0.58 per cent) and industrials (+0.40 per cent). Losing sectors included oil and gas (-1.92 per cent), telecommunications (-1.26 per cent), fledgling (-0.58 per cent) and consumer services (-0.48 per cent).

Stocks

Neptune Orient Lines Ltd. (SGX:N03) shot up 2.84 per cent to SG$0.905. Singapore Exchange Limited (SGX:S68) has issued a “trade with caution” notice on the counter following a sharp rise in its price. In response to a query from the exchange the shipping company had said that it was unaware of any information that could explain the movement, according to Channel News Asia.

DBS Bank [DBS Group Holdings Ltd (SGX:D05)] has taken the initiative to develop new digital solutions that can help its customers to enhance productivity. The technology, known as FasTrack, is already operational at food and beverage company Old Tea Hut, where customers can avoid long lunch time queues by placing orders in advance via the mobile app, according to Channel News Asia. Mr Jeremy Soo, managing director and head of consumer banking group (Singapore) at DBS Bank, said: "We want to target quick-serve business as the primary target because that is where they can extract the highest benefit from the productivity." The bank is also discussing the implementation of the technology at other outlets such as Manhattan Fish Market, Skinny Pizza and Tiong Bahru Bakery.

Singapore Exchange Limited (SGX:S68) is grappling with falling derivatives volumes as investors shun futures trading in Chinese shares following the sell-off in recent months. According to the Business Times, which quoted data from Thomson Reuters, trading in one of the exchange's key futures contracts for Chinese shares has crashed by nearly 75 per cent from a record high in July. Moreover, Singapore IPOs are down by 65 per cent till date in 2015, totalling just US$1.9 billion (SG$2.7 billion) and likely to be the lowest for the nine-month period since 2003.

Economic news

The Monetary Authority of Singapore (MAS) said in a news release on Tuesday that it will table amendments to the Securities and Futures Act next year with a view to strengthening the regulatory framework to safeguard investors’ interests.

An article on Tuesday by S&P warned that companies in ASEAN would have to contend with higher funding costs, along with tighter availability, over the next 12 to 24 months due to currency depreciation. S&P also cautioned that “besides the path of US interest rates, a more challenging growth environment could also lead lenders to reassess credit risk and return, following years of deteriorating balance sheets."

The Asian Development Bank (ADB) on Tuesday cut its estimates for growth in developing Asia following the slowdown in the Chinese economy. Developing Asia is now expected to grow 5.8 per cent and 6.0 per cent this year and in 2016, down from the July forecast of 6.1 per cent and 6.2 per cent, ADB said in its 2015 outlook update.

On Wall Street stocks closed lower on Tuesday, joining European equities in falling on worries about global growth, falling commodity prices and the spiralling Volkswagen emissions scandal. The Dow Jones Industrial Average dropped 179.72 points (1.09 per cent) to 16,330.47. The broad-based S&P 500 fell 24.23 points (1.23 per cent) to 1,942.74, while the tech-rich Nasdaq Composite Index sank 72.23 points (1.50 per cent) to 4,756.72.