STI makes first gain in five days...

Nov 15, 2007

TAKING STOCK: STI makes first gain in five days as Wall St rallies
News of delay in Sino-Environment's China project cuts rebound by one-third

STOCKS in Singapore snapped a four-day losing streak yesterday, as bargain hunters took the hint from Wall Street's high-octane rebound overnight and piled back into badly battered blue chips.

But while prices turned north again, there was little sign of exuberance among traders.
It did not help that Sino-Environment Technology Group, a China play, plunged 25 per cent after revealing a delay in its maiden desulphurisation plant.

This bolt from the blue caused the Straits Times Index (STI) to pare one-third of its gains, closing 49.44 points up at 3,524.91. At one point, it was 77 points ahead. But while Singapore was relatively subdued, Hong Kong's Hang Seng Index surged 4.9 per cent, or 1,362.66 points, and China's Shanghai Composite Index rose nearly 5 per cent, underlining the energising effect of Wall Street's 319.5-point gain.

Yet, there was a big sigh of relief among dealers, who felt the region-wide selldown by hedge funds seemed to be over for now. 'The correction in the past few days has been painful. I am looking forward to the rebound to recoup some of my losses. What I fear is a bear trap,' said a remisier yesterday.

But the collapse in Sino-Environment was almost too painful to behold. Investors dumped the shares after it disclosed that it had been asked to delay its desulphurisation project at the Xinjiang Changji Power Plant.

With CIMB-GK cutting its call on the stock from outperform to neutral, it lost about 14 per cent of its value by lunchtime. A further selldown during the last hour of trading caused its loss to escalate to 25 per cent as it plunged 78 cents to $2.28.

This cast a pall over other S-shares, China plays listed in Singapore, even though H-shares, their Hong Kong peers, rose by 6.8 per cent. This was fuelled by renewed hopes that a 'through train' programme by China to let its citizens buy into Hong Kong stocks is still in the pipeline.
Among speculative S-shares, Delong Holdings fell 13 cents to $2.58, while even solid China plays such as Cosco Corp closed just 10 cents up at $6.85.

The collateral fallout was also felt by debutant China New Town Development, which closed three cents below its 83-cent listing price at 80 cents. But property and shipyards were back in demand, as the US dollar strengthened against the yen, and crude oil retreated towards US$90 a barrel.

Keppel Corp gained 30 cents to $13.30, and SembCorp Marine rose four cents to $4.42. The Singapore Exchange, which rose 80 cents to $13.80 as the sell-off abated, was among the biggest gainers.

Biodiesel plays were among the star performers, after crude palm oil prices hit new highs and plantation firms unveiled sterling results. Plantation giant Wilmar International rose by 36 cents to $4.82. It reported a fourfold jump in third-quarter gains to US$195 million (S$283 million).
Among property counters, CapitaLand rose 15 cents to $7.10, while Wing Tai Holdings gained 16 cents to $2.75.

But banks were hurt by concerns over credit woes in the United States. DBS Group Holdings ended unchanged at $20.10, while United Overseas Bank rose just 10 cents to $19.60, after investors took advantage of initial gains made by both counters to pare their holdings.

After the market closed, HSBC Holdings said it had taken a US$3.4 billion charge against its US consumer finance business and warned that problems with bad debts relating to mortgages were spreading to other loans such as credit cards.

Source: The Straits Times