Shares down at midday as China rate hike eyed; DBS falls

Singapore shares were down at midday on Friday ahead of a long weekend as investors feared China would take further steps to cool its economy, but traders said the downside may be limited in the afternoon.

At the lunch break, the Straits Times Index (STI) <.FTSTI> lost 0.26%, or 8.41 points, at 3,176.58. The total value of shares traded in the morning session was $905.5 million, higher than $766.5 million on Thursday.

The Singapore stock market will be closed on Monday for Labour Day.

 

Shares of Singapore’s DBS (DBSM.SI), Southeast Asia’s largest bank, fell 0.4% to $14.86 on a volume of 4.8 million shares, even though the lender posted record quarterly profit for the first three months of 2011.

 

“There is a sense that the interest rates may not go up in the near term,” said Andrew Chow, head of research at UOB Kay Hian, of DBS’s earnings.  

“China still has a little bit more tightening to go,” he said of the  weakness in the broader market.

 

Shares of abalone breeder Oceanus Group (OCGL.SI) rose as much as 17%  after Reuters reported that Kohlberg Kravis Roberts & Co (KKR.N) is in talks to buy the firm in a deal that may be worth around US$500 million($613.6 million). 

 

At midday, Oceanus shares were up 14.6% at $0.275 on a volume of 29.3 million shares.