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The Singapore Market this Week: Sembcorp Marine Ltd Gets Booted Out of the Straits Times Index

For the week, the Straits Times Index (SGX: ^STI), which represents the Singapore stock market, fell by 1.9% to 2,804 points.

Of the 30 stocks that make up the index, 24 clocked in weekly losses, with shipping firm Yangzijiang Shipbuilding Holdings Ltd (SGX: BS6) leading the pack down. The company saw its share price drop 7% to close at S$0.73, as the problems surrounding Korea’s Hanjin reverberate around the shipping industry.

Around a month back, Yangzijiang released its financial results for the three months ended 30 June 2016. During the period, the top line dived 48% year-on-year to RMB 3.0 billion, largely due to a decline in revenue from the shipbuilding related segment. This brought about lower profit for the quarter, leading to a bottom line decline of 60% to RMB 415.4 million.

Another big loser in the index was rig builder Sembcorp Marine Ltd (SGX: S51). Its shares slumped from S$1.315 a week ago to S$1.23 this week. This equates to a 6.5% decline.

It was announced this week that the firm will be dropped from the Straits Times Index, following the September quarterly review. It will be replaced by conglomerate, Jardine Matheson Holdings Limited (SGX: J36). The changes will kick in after the market closes on Sept 16, and the new STI make-up will be effective on Sept 19.

The slump in oil prices has taken a huge toll on Sembcorp Marine’s profitability. For the financial year ended 31 December 2015, the firm saw a net loss of S$290 million compared to a profit of S$560 million a year back.

Five other stocks in the STI saw their share prices climb for the week, while Golden Agri-Resources Ltd (SGX: E5H) ended the week flat at S$0.355.

Outside of the blue chips universe, telecommunications provider, M1 Ltd (SGX: B2F), saw its share price tumble around 7% to S$2.51.

On Thursday, it was made public that three companies – MyRepublic, TPG Telecom and airYotta – have submitted bids to become our country’s fourth telco. Just like M1’s share price, the two other listed telcos also faced a weakening of their share prices. StarHub Ltd (SGX: CC3) declined 7% to S$3.47 while leader, Singapore Telecommunications Limited (SGX: Z74), shed 5.9% to S$3.97.

The SPDR STI ETF (SGX: ES3), an exchange-traded fund which tracks the fundamentals of the Straits Times Index, is now valued at 11.8 times trailing earnings and has a dividend yield of 3.3%.

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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.