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The Singapore Market this Week: Sembcorp Marine Ltd Leads the Index Down

The Straits Times Index (SGX: ^STI), Singapore’s local stock market bellwether, lost 46 points, or 1.6%, during the week to finish at 2,827 points. This compares with the previous week’s close at 2,873 points.

Of the 30 stocks that make up the index, 25 of them saw weekly losses. The biggest loser of them all was oil rig builder Sembcorp Marine Ltd (SGX: S51). Its share price had tumbled by 9.7% to S$1.25.

16 September marked the end of Sembcorp Marine’s stint as a constituent of the Straits Times Index. The company was replaced by Jardine Matheson Holdings Limited (SGX: J36) following the September quarterly review by the creators of the Straits Times Index. The change to the index will be effective come Monday, 19 September.

Despite getting booted out of the index, my Foolish colleague Chong Ser Jing says that it is the least of his worries with Sembcorp Marine. Instead, what he is really worried about with the company is the strength of its balance sheet and its ability to generate cash. You can check out his concerns here.

Another loser this week was retail real estate investment trust, CapitaLand Mall Trust (SGX: C38U). Its units shed 6 cents each, or 2.8%, to close at a price of S$2.08 on Friday.

On 7 September 2016, CapitaLand Mall Trust, Singapore’s largest REIT by market capitalisation, announced its plans for the new mall that will be developed on the site of the old Funan DigitaLife Mall. My colleague Chin Hui Leong has shared CapitaLand Mall Trust’s plans in detail. Here they are.

At the other end of the winner-loser spectrum, SATS Ltd (SGX: S58), which became a constituent of the Straits Times Index only in September last year following the quarterly review then, was the biggest winner in the index. Its shares gained 2.3% to S$4.88 each.

Outside the index, land transport services provider SMRT Corporation Ltd (SGX: S53) ended the week flat with a share price of S$1.655. Towards the end of July, Temasek, one of the Singapore government’s investment arms, offered to take the transport firm private in a S$1.2 billion deal. The price offered was S$1.68 for each share that Temasek did not yet own in SMRT at that time; prior to the offer Temasek was already the majority shareholder of SMRT.

Following the offer, local newswire the Straits Times reported that an influential proxy advisory firm Institutional Shareholder Services (ISS) had made a recommendation for institutional investors to accept what Temasek has offered.

ISS mentioned in a report that the valuation of SMRT’s shares is “generally in line or above the valuation for comparable companies and precedent takeovers.” Temasek’s offer price values the transport firm at a price-to-earnings ratio of 24.5.

The SPDR STI ETF (SGX: ES3), an exchange-traded fund which is seen as a proxy for the Straits Times Index, is now trading at 11.9 times trailing earnings and has a dividend yield of 3.2%.

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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.