STI little moved by Wall Street's interest rate fears

STI little moved by Wall Street's interest rate fears

By Arthur Poon

INVESTORS had an early scare yesterday as the Singapore market fell sharply, but a quick rebound left them pretty much unscathed at the end of the session. The Straits Times Index (STI) fell more than 31 points at the opening bell - hitting an intra-day low of 3,525.76 - on jitters from sharp overnight losses on Wall Street. But the index recovered by early afternoon to finish just 0.3 per cent, or 10.32 points, down at 3,551.22. Dealers say concerns that the United States Federal Reserve may lift interest rates later this year in response to a hike in the 10-year yield of US Treasury notes to a five-year high weighed on US stocks. The current yield is above the Fed's target for its main short-term interest rate of 5.25 per cent. Any rise in interest rates would hurt the already weak US housing market. The Dow Jones Industrial Average lost nearly 1 per cent to 13,295.01, sparking a knee-jerk but short-lived sell-off in Singapore. At home, volume was high at 4.28 billion shares worth $2.31 billion, marking the third time in the last four sessions that volume exceeded the four-billion share mark. 'Fund managers reweighting their portfolios may not find Singapore equities cheap, but they do not find them too expensive either, in view of the high liquidity and the strengthening of the Singapore dollar,' said Mr Gabriel Yap, senior dealing director at DMG & Partners Securities. Yesterday, losers led gainers by 425 to 381. Among the winners was conglomerate Fraser & Neave, up 10 cents to $5.60 after its unit had bought a Sydney site for A$208 million (S$270 million). Hong Leong Finance gained two cents to $4.08, after announcing that it will pay $405 million for ABN Amro's car loans business. Property developer CapitaLand, however, shed five cents to $7.95, despite unveiling a $420 million purchase of a freehold Orchard condominium a day earlier. Pan-United Marine fell two cents to $2.38 - the offer price made by a unit of Dubai World for all outstanding shares of the shipping firm. Construction-based firms dominated the most active list. Yongnam Holdings was the second most active counter, closing at 42.5 cents, up 5.5 cents on 209.4 million shares traded. Sapphire, a building maintenance firm formerly known as IRE, gained half a cent to 3.5 cents. Specialist foundation and engineering firm CSC Holdings rose 1.5 cents to 38 cents.