The Singapore Market this Week: Red Ink Everywhere

Singapore’s stock market, as represented by the Straits Times Index  (SGX: ^STI), did not start the first trading week of 2016 on a good note as it slumped 4.6% to close at 2,751 points on Friday.

A weakening Chinese currency, the falling price of oil, and concerns about conflicts between nations in the Middle East, are headlines that have appeared in the press in recent times which may have spooked investors.

In any case, the stock market rout in Singapore saw all 30 constituents of the Straits Times Index, except one – Golden Agri-Resources Ltd (SGX: E5H) – finish the week with a loss. Palm oil outfit Golden Agri had put on 2.9% to S$0.35 while the biggest loser in the index was another commodities-related firm, the commodities trader Noble Group Limited (SGX: N21). Shares of Noble had plummeted from S$0.40 last week to end Friday at S$0.34, a decrease of 15%.

Credit ratings agency Standard & Poor’s (S&P) announced during the week that it had lowered Noble’s credit rating to junk status, from BBB- to BB+, due to what the agency perceives as Noble’s weak liquidity position.

S&P’s move follows fellow credit ratings agency Moody’s downgrading of Noble’s credit rating to junk status just a week ago – it’s been one bad news after another for the beleaguered Noble.

Moving from the commodities space to aviation, Singapore Airlines Ltd  (SGX: C6L) said that it will be bumping up its privatisation offer for budget carrier Tiger Airways Holdings Limited (SGX: J7X) from S$0.41 per share to S$0.45. It’s a move by Singapore Airlines to entice more shareholders of Tiger Airways to let go of their shares.

Singapore Airlines added that this would be the final offer and that shareholders who had already agreed to sell at the previous price will be offered the higher price automatically. Singapore Airlines had lost 1.7% to S$11.01 during the week while Tiger Airways, perhaps unsurprisingly, put on 9.8% to S$0.45.

Outside the Straits Times Index, it was reported that private equity investors, Blackstone Group LP and Gaw Capital Partners, are looking to acquire Ascendas Hospitality Trust  (SGX: Q1P) in a deal worth around US$600 million. The investors are putting in separate bids. The stapled trust has 11 hospitality properties in Australia, China, Japan, and Singapore as part of its portfolio. In our shores, it owns Park Hotel Clarke Quay. Ascendas Hospitality Trust’s stapled securities added 2% in price to S$0.755 during the week.

The SPDR STI ETF (SGX: ES3), an exchange-traded fund, which can be taken as a proxy for the Straits Times Index, is now valued at 11.2 times trailing earnings and sports a dividend yield of 3.5%.

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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.