singapores sti falls sharply in line with global cues 1013142015

Stocks on the Singapore exchange fell sharply on Tuesday, even as the Singapore dollar plunged to a five-year low against the US dollar in the aftermath of a shock yuan devaluation by China. In local economic news, both GDP growth and non-oil domestic exports during the second quarter came in far below their first quarter levels.

The decline, which was fairly broad-based across the market, was accompanied by decent volume. Unfortunately, the STI is now down over 6 per cent year to date.

Indices and sectors

The Straits Times Index (STI) ended 43.6 points or 1.36 per cent lower to 3,153.06, taking the year-to-date performance to -6.30 per cent.

The FTSE ST Mid Cap Index declined 1.00 per cent, while the FTSE ST Small Cap Index declined 0.56 per cent.

The Singapore Exchange traded a volume of 1,980 million shares valued at SG$1,889.6 million. Losers outnumbered gainers by 297/161.

Amongst the FTSE ST sectors, the top losers included financials (-1.81 per cent), real estate investment trusts (-1.77 per cent), telecommunications (-1.64 per cent), maritime (-1.52 per cent), consumer goods (-1.37 per cent) and real estate (-1.10 per cent).

Stocks

Instant food and beverage manufacturer Super Group Ltd. (SGX:S10) jumped 3.83 per cent to SG$0.950. The company said second-quarter net profit fell 30 per cent to SG$10.5 million, while revenue slumped 5 per cent to SG$125.5 million. The company attributed the performance to sales declines in both branded consumer products and ingredients, as well as falling sales in the Philippines and Eastern Europe, according to Straits Times.

Boustead Projects Ltd (SGX:AVM) said net profit during the first quarter ended June declined 19 per cent to SG$4.8 million owing to a combination of factors such as foreign exchange losses, weak margins and financial expenses, according to the Business Times.

Healthway Medical Corp Ltd (SGX:5NG) said net profit during the second quarter ended June surged 294 per cent to SG$2.05 million from SG$520,000 in the prior year period, while revenue jumped 15.5 per cent SG$24.06 million. Earnings per share were 0.09 Singapore cents during the quarter compared to 0.02 Singapore cents in the prior year.

According to a report in the Business Times, the Noble Group Limited (SGX:N21) has roped in investment banker and dealmaker Michael Klein, who has been advising the company in recent weeks, to review options for the commodity trader including a stake sale or securing finance from banks.

Economic news

The People’s Bank of China yesterday devalued its yuan currency by 1.9 per cent against the US dollar in a move designed to bolster falling external trade. Chinese exports fell 8.3 per cent in the month of July. The surprise move by the Chinese central bank caused major volatility in global financial markets yesterday. The Singapore dollar slumped to a five-year low of SG$1.40 against the US dollar in Asian trading.

Singapore’s Ministry of Trade and Industry (MTI) said Tuesday that the economy grew 1.8 per cent year-on-year during the second quarter of 2015, down from 2.8 per cent in the previous quarter, and in line with the government’s previous estimate of 1.7 per cent. According to Channel News Asia, the quarterly growth beat estimates of 1.5 per cent by a Reuters survey of 11 economists.

“The global economy performed weaker than expected in the first half of 2015,” MTI said. “For the rest of the year, global growth is expected to pick up gradually, although the pace of growth is likely to be uneven across economies.”

For the full year 2015 the growth forecast has been reduced to 2 per cent to 2.5 per cent from the earlier expectation of 2 per cent to 4 per cent.

According to International Enterprise Singapore, non-oil domestic exports out of Singapore grew just 2.1 per cent in the second quarter of 2015, substantially lower than the 4.8 per cent growth the previous quarter. Total merchandise trade declined 10.6 per cent in the second quarter, coming on top of a 10.5 per cent decline the previous quarter, as reported by Channel News Asia.

After all-night negotiations, Greece and its international lenders hammered out an €85 billion (SG$131.64 billion) bailout agreement on Tuesday that also finalised the terms of new loans required to avert financial bankruptcy.

On Wall Street Tuesday, stocks fell sharply on news of the Chinese yuan devaluation and investors’ worries on the impact of the Chinese move on major US corporations that have substantial operations exposed to China. The Dow Jones Industrial Average closed down 212.33 points (1.21 per cent) at 17,402.84. The broad-based S&P 500 fell 20.11 points (0.96 per cent) to 2,084.07, while the tech-rich Nasdaq Composite Index tumbled 65.01 points (1.27 per cent) to 5,036.79.