The Singapore Market this Week: Noble Group Limited Leads the Pack Down

For this week, the Straits Times Index (SGX: ^STI) declined 1.4% to end at 2,793 points. From the most recent peak of 3,549 points seen in April 2015, the index has slumped by 27%.

Out of the 30 index constituents, 18 index stocks finished in the red. The biggest loser – once again this week – was commodity firm, Noble Group Limited (SGX: N21). It slumped 13.2% to end Friday at S$0.395.

If you are thinking of purchasing Noble as it is cheap, my Foolish colleague, Ser Jing, says we should think again. We should only purchase businesses based on fundamentals and not because of its cheapness. Also, Noble is not exactly cheap in terms of valuation. At a price of S$0.395, it is valued at around 19 times its historical earnings. With the STI trading at much lower valuations, Noble is looking quite expensive.

Golden Agri-Resources Ltd (SGX: E5H) gained the most ground. The world’s second largest palm oil plantation company put on 6.4% to S$0.335.

Elsewhere, Sarine Technologies Ltd (SGX: U77), which is involved in the diamond industry, saw its share price drop 8.3% for the week to S$1.555.

It issued a profit warning on Thursday, saying that it expects “to record an operating loss for the quarter ended 30 September 2015 [third quarter of 2015] of around US$ 1.5 million”. Quarterly revenues is also expected to dip 30% year-on-year.

The perceived poor showing is on the back of unsustainable prices between rough and polished diamonds, and “residual inventory overhang”. Also due to the upcoming annual Diwali holiday in India, Sarine expects diamond manufacturing activity to remain muted for at least the first two months of the fourth quarter.

The situation is further exacerbated by limited working capital credit lines for its customers. The above confluence of events “have caused a handful of defaults amongst our midstream customers, primarily in India”.

The SPDR STI ETF (SGX:ES3), which is a proxy for the Straits Times Index, is now trading at 11.2 times its trailing earnings and has a dividend yield 3.4%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.