Lingering fears over global recovery keep trading volumes low
INVESTORS stayed away in droves yesterday as the market endured its quietest day in five trading sessions.
Lingering worries about the strength of the global recovery kept interest at a minimum, leaving the Straits Times Index flitting between positive and negative territory for most of the day.
It closed at 2,844.02 points, a marginal 0.17-point dip, while overall volumes fell to 976 million shares worth $890 million.
It was a rerun of last Monday when trading got off to a slow start and volumes dipped below the one-billion mark.
DMG and Partners Securities co-head of research Terence Wong said that fears over the world economy contributed to the low volumes.
Uncertain employment data from the United States last week and weak manufacturing figures from China have reignited fears of a global slowdown.
Mr Wong added: 'For the rest of the week, we will see a trading lull. Volumes will still remain low as we head to the end of the World Cup. There's a lack of trading ideas out there.'
Property counters and stocks with heavy real estate exposure ended mixed. Fraser & Neave lost nine cents to $5 and CapitaLand dipped one cent to $3.61, but Keppel Land rose two cents to $3.97 and City Developments rose four cents to $11.06.
Last week, official estimates showed that private home prices here rose a higher-than-expected 5.2 per cent in the second quarter, and are now higher than the 1996 peak.
'With rising concerns over the strength of the US economic recovery, signs of a slowdown in China and the ongoing euro-zone debt crisis, buying sentiment could be dented in the near future,' noted OCBC Investment Research, which has a 'neutral' rating on the property sector with a preference towards the residential segment.
'Nevertheless, fundamentals of the residential property market remain sound,' added OCBC.
A notable gainer was plantation firm Wilmar International, which put on 13 cents to $5.88. It said before markets opened that it has agreed to acquire Australian sugar and renewable energy firm Sucrogen for A$1.75 billion (S$2.1 billion).
'We are positive about the acquisition as it allows Wilmar to leverage on Sucrogen's management to expand the sugar business into fast-growing emerging markets by tapping on Wilmar's strong distribution network,' said CIMB in a note. CIMB maintained its 'neutral' call and target price of $6.50 on Wilmar.
China Animal Healthcare dipped half a cent to 31.5 cents. A fund controlled by the Blackstone Group is investing about US$45 million (S$63 million) in the mainland firm.
Building contractor CCM Group saw an upbeat trading debut. It rose throughout the day to close at 35.5 cents, up a whopping 78 per cent from its IPO price of 20 cents.
Stocks elsewhere in the region ended up mixed. The Nikkei-225 in Tokyo put on 0.7 per cent but Hong Kong's Hang Seng Index slid 0.3 per cent. Shanghai shares fell 0.8 per cent to close at a 15-month low on fears of slowing growth and rising inflation.
Source: Straits Times, 6 Jul 2010