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Bad news all over keeps investors in Asia on edge

Publication Date : 04-10-2012

 

Bad news came from all around yesterday, dragging down share prices across much of Asia, including the local bourse.

Weak data showing that China's services sector expanded at the slowest pace in at least 19 months, a widening trade gap in Australia and growth downgrades by the Asian Development Bank (ADB) left investors jittery.

Most Asian markets closed either flat or lower, with Japan's Nikkei falling 0.4 per cent.

But Hong Kong's Hang Seng Index managed to eke out a gain of 0.2 per cent as the market resumed trading after closing for a public holiday for two days.

In Europe, Spain's Prime Minister Mariano Rajoy snuffed out expectations of a bailout.

On the other side of the Atlantic, investors will keep a close eye on key US job data to be released later in the week.

"Markets initially cheered the announcement of monetary easing by the Fed and European Central Bank. However, the optimism waned fairly quickly, as investors refocused their attention on the weak global economic growth data," said Vasu Menon, OCBC Bank's Singapore wealth management vice-president.

But he said Asian and emerging market equities have "superior fundamentals and still attractive valuations compared to the rest of the world".

The benchmark Straits Times Index lost two points or 0.06 per cent to close at 3,077.14. Some 1.68 billion shares worth S$1.18 billion (US$958 million) were traded, similar to Tuesday's 1.68 billion shares worth S$993.2 million.

Commodity stocks were hit hard. Golden Agri-Resources was the biggest loser, shedding two cents or 3 per cent to 63.5 cents.

This was sparked by a steep decline in Malaysian palm oil futures to a three-year low on Tuesday. They rebounded yesterday, but analysts say rising inventory and weak demand are likely to cap the upside for crude palm oil.

Rival palm oil producer Wilmar International fell four cents or 1.3 per cent to S$3.16. The drag in both counters shaved 3.18 index points from the STI.

Noble Group lost 3.5 cents or 2.7 per cent to S$1.285, while Olam International shed three cents or 1.5 per cent to S$2.01.

STX OSV Holdings rose 0.5 cent or 0.3 per cent to S$1.595. It recently said it won a US$80 million contract for a new-build cable-laying vessel.

Yeo Hiap Seng surged 24 cents or 12 per cent to S$2.20. Maybank Kim Eng Research has a buy on the food and beverage firm, given its improving margins and huge "treasure trove" land bank.

US$1 = S$1.23

 

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