Shares down at midday, property firms hurt by China rate hike

Singapore shares fell 1.1% by the midday on Wednesday, as China’s latest interest rate hike weighed on regional stock market confidence and dragged property firms such as CapitaLand (CATL.SI) lower.

At the lunchtime break, the Straits Times Index (STI) <.FTSTI> was down 33.96 points at 3,151.40. The total value of shares traded in the morning session was $1.1 billion, up from $729.4 million on Tuesday.

“The rate hike has given the market an excuse to take some money off the table,” said Carey Wong, an investment analyst at OCBC Investment Research. 

 

“It’s not a surprise, but the question now becomes, at what point should governments stop hiking rates so they don’t cause a sharp slow down in the economy,” said Wong, who expects the STI to find support at 3,100 over the next week.

 

Wong said investors are likely to be sidelined as they await positive cues from Singapore’s 2011/12 budget that will be announced next Friday.

Shares of Southeast Asia’s largest property developer CapitaLand fell as much as 2.8% to an eight-month low after China raised interest rates by 25 basis points late on Tuesday, its second increase in just over six weeks.

 

At the lunch break, CapitaLand were 2.2% lower at $3.50 with over 29 million shares changing hands.

 

“CapitaLand’s shares were hit today by the rate hike as it has a big exposure to China,” said Donald Chua, an analyst at CIMB Research.

 

City Developments (CTDM.SI) shares were also hit although it has a smaller exposure to China, due to investors’ bearish sentiment towards real estate firms. 

Its shares retreated 3.2% to $10.84 by the midday, with over 4.1 million shares changing hands.

 

Wilmar International (WLIL.SI), the world’s largest listed palm oil firm, lost 2.7% at $5.33, hit by a knee jerk reaction to China’s rate hike, which typically dampens consumer demand.  

 

At 11:23 a.m., shares of Wilmar were 2.4% lower at $5.35 with over 5.6 million shares changing hands.

 

Singapore-listed STX OSV Holdings (STXO.SI) outperformed the broader market, rising 1.6% to $1.25 on hopes that rising oil prices will help boost orders for offshore support vessels.