singapores straits times index avoids its sixth daily loss by a hair 1453522015

Singapore stocks spent Wednesday in volatile trading with the STI showing only a marginal gain by the end of the session. Compared to global markets, which rebounded smartly, the SGX put up only a muted show and just about managed to avert its sixth consecutive negative closing.

Nevertheless, the benchmark STI clocked its fifth consecutive month in the red with a loss of 4.7 per cent, reflecting the slowdown in the Singapore economy on the back of falling Chinese growth.

Indices and Sectors

The Straits Times Index (STI) ended 2.95 points or 0.11 per cent higher at 2,790.89, taking the year-to-date performance to -17.06 per cent.

The FTSE ST Mid Cap Index gained 0.99 per cent, while the FTSE ST Small Cap Index declined 0.03 per cent.

The Singapore Exchange traded a volume of 1,128.1 million shares valued at SG$1,344.3 million. Gainers outnumbered losers by 205/168.

Amongst the FTSE ST sectors, the gaining sectors included technology (+2.49 per cent), telecommunications (+1.28 per cent), utilities (+1.2 per cent), and real estate investment trusts (+0.94 per cent). Losing sectors included basic materials (-1.64 per cent), real estate holding and development (-0.52 per cent), CataList index (-2.19 per cent) and industrials (-0.14 per cent).

Stocks

Singapore Telecommunications Limited (SGX:Z74) gained 1.41 per cent to SG$3.60. The stock has been upgraded by Citi Research to a buy rating with a price target of SG$3.92. The analysts said the stock had been oversold and valuations had become attractive.

Hong Leong Asia Ltd. (SGX:H22) fell 2.20 per cent to SG$0.89. The company warned Wednesday that it expected to post a loss for its third quarter ended September 30, mainly due to higher losses incurred by its consumer products unit on the back of lower unit sales. The company will announce its third-quarter results in November, according to the Business Times.

Economic news

Even as speculation mounts that the Monetary Authority of Singapore (MAS) will be forced to ease policy at its meeting next month, the Singapore dollar saw its worst quarterly loss in four years, according to TODAY. “The Singapore dollar was really hit, not only by weakness in the domestic economy, but from weakness in the renminbi and Malaysian ringgit as well,” said ANZ Singapore strategist Mr Khoon Goh. “My sense is that the market is probably gravitating towards some form of easing by MAS in the October meeting.”

Credit Suisse too expects the MAS to ease monetary policy in October following from the weak August industrial production numbers, according to the Business Times. "We now see MAS easing again in October (by Oct 14 at the latest) by shifting to a neutral policy stance, or zero appreciation,” the CS analysts said. "We expect the NEER (Nominal Effective Exchange Rate) to fall towards the bottom of its policy bands on confirmation of a dovish central bank shift."

Data from the Monetary Authority of Singapore showed that bank lending in August stood at SG$613 billion, up just 0.5 per cent from SG$610 billion in July, with flat growth in consumer lending acting as a drag. On a year-on-year basis, August bank lending was up 1.5 per cent compared to 2.2 per cent in July, the Business Times said.

IMF managing director Christine Lagarde warned Wednesday in a speech that global growth is likely to be adversely affected due to the slowing economies in the developing world. "The not-so-good news is that emerging economies are likely to see their fifth consecutive year of declining rates of growth," she said. "Global growth will likely be weaker this year than last, with only a modest acceleration expected in 2016.”

According to Singapore’s Ministry of Law, new money lending regulations will take effect on October 1 and will cap the cost of borrowing from licenced moneylenders. The new regulations will limit administrative fees, monthly interest rates, late interest rates, late fees and fix an overall borrowing cost ceiling that cannot exceed 100 per cent of the loan principal amount.

On Wall Street on Wednesday, stocks rebounded on buying by bargain hunters and a recovery in biotechnology index, according to Reuters. The Dow Jones Industrial Average rose 235.57 points, or 1.47 percent, to 16,284.7, the S&P 500 gained 35.94 points, or 1.91 percent, to 1,920.03, and the Nasdaq Composite added 102.84 points, or 2.28 percent, to 4,620.17.

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