singapores sti gives up most of the session gains ends in the red 1130952015

Singapore may be at risk of going into a recession, after data shows a plunge in factory output

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By :  ,  Financial Analyst

Singapore stocks ended marginally lower Wednesday, taking their cues from the volatile but negative closing overnight on Wall Street, and shrugging off the rate and reserve cuts announced by the Chinese central bank. Data that showed another plunge in Singapore’s manufacturing output during July, weighed on investor sentiment. Shares in short seller targeted Silverlake Axis Ltd (SGX:5CP) crashed 27.56 per cent to $0.460 after the stock emerged from a trading halt.

Indices and sectors

The Straits Times Index (STI) ended 13.29 points or 0.46 per cent lower at 2,873, taking the year-to-date performance to -14.62 per cent.

The FTSE ST Mid Cap Index declined 0.99 per cent, while the FTSE ST Small Cap Index rose 0.76 per cent.

The Singapore Exchange traded a volume of 2,329.1 million shares valued at $1,542 million. Losers outnumbered gainers by 268/225.

Amongst the FTSE ST sectors, the gainers included real estate holding and development (+1.31 per cent), real estate (+0.58 per cent), China (+0.21 per cent) and consumer services (+0.13 per cent). Losing sectors included technology (-11.82 per cent), maritime (-2.09 per cent), oil and gas (-1.84 per cent), utilities (-1.35 per cent), telecommunications (-1.21 per cent) and healthcare (-1.15 per cent).


Croesus Retail Trust (SGX:S6NU) said income available for distribution during the fourth quarter ended June 30 rose 23.9 per cent to JPY 876.7 million ($10.4 million), while gross revenue jumped 25.5 per cent to JPY 1.9 billion mainly due to the acquisition of One's Mall in October 2014 and tenants' renewal exercise at Mallage Shobu, according to the Business Times. The trust posted a 1 per cent year-on-year increase in distribution per unit (DPU) to 2.02 Singapore cents.

Eu Yan Sang International Ltd. (SGX:E02), a retailer of traditional Chinese medicine, said it swung to a net loss of $3.6 million in the fourth quarter 2015 from a net profit of $1.61 million in the prior year period, largely due to slower sales and lower gross margins, as well as a challenging macro environment in Hong Kong and Malaysia. Revenue plunged 15 per cent to $72.25 million.

HupSteel Limited (SGX:H73) swung to a net loss of $9.3 million during the fourth quarter ended June 30, compared to a net profit of $1.13 million in the prior year quarter, on the back of an inventory write-down, a goodwill write-off and provisions for doubtful debts, according to the Business Times. Revenue slumped 36.3 per cent to $17.4 million as demand for steel products continued to suffer through the year.

Economic news

Singapore’s factory output during July fell 6.1 per cent year-on-year, down for the sixth successive month, on the back of lower production of electronics, pharmaceuticals and rigs, said Channel News Asia, quoting data from EDB released Wednesday (August 26). The reading came in far below the 4 per cent decline that was expected by economists in a Bloomberg survey.

The decline in factory output raises fears of a contraction of economic growth during the July to September quarter and, taken with the contraction of 4 per cent in the previous April to June period, it could mean that technically Singapore is in recession. A recession is defined as two consecutive quarter-on-quarter declines in overall economic output.

New York Fed President William Dudley said Wednesday that the chances of a September interest-rate hike “seem less compelling to me than it was a few weeks ago,” given that the recent global market turmoil has heightened the risks for the US economy, as reported by Channel News Asia.

On Wall Street Wednesday, US stocks surged to their biggest one-day gain in four years after the aforesaid remarks by Mr. Dudley, and new orders for durable goods rose 2 per cent in July from the previous month. Investors got over their fears regarding the Chinese economy and turned bargain hunters instead, according to Reuters. The Dow Jones Industrial Average finished 3.95 percent higher at 16,285.51, the S&P 500 gained 3.9 percent to 1,940.51 and the Nasdaq Composite added 4.24 percent to end at 4,697.54.

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