Shares down at midday on talk of US ratings cut; 3,160 support seen

Singapore shares were 0.5% lower by the midday on Thursday in line with other Asia bourses, as investors grew increasingly jittery over the possibility of a U.S. credit ratings downgrade.

Hutchison Port Holdings Trust (HPHT.SI), which owns port assets, underperformed the broader market and fell as much as 3% to an intraday record low, as traders said a weaker U.S. dollar made its distribution income less attractive.

By the midday break, the Straits Times Index (STI) <.FTSTI> was down 15.87 points at 3,177.67. The total volume of shares traded in the morning session was 803.2 million shares and turnover was $798.4 million.

 

This compares with the volume of 903.2 million shares and turnover of $845.9 million in Wednesday’s morning session. Local traders said they expected the STI to trade in 3,160-3,180 band in the afternoon.

 

“Investors are getting more and more jittery, and we see a move towards safe-haven assets. It’s looking bad for equities,” said Tey Tze Ming, a market strategist at Saxo Capital Markets.

 

The likelihood of a downgrade in U.S. credit rating is rising, with Washington still in a stalemate over the U.S. debt ceiling as the August 2 deadline draws near.

 

“We’re looking at two scenarios now. The U.S. may default and its triple A rating may be cut, both of these will be equally damaging and if either happens, we will see more downside for equities,” Tey said.

 

Units of Hutchison Port were 2.5% lower at $0.77 with over 33.7 million units changing hands by the midday. 

 

Shares of DBS (DBSM.SI), Southeast Asia’s largest lender, fell 0.65% to $15.22, in line with the broader market after it posted quarterly earnings that was slightly above analyst forecasts, helped by strong loan growth. 

 

Midas Holdings (MIDA.SI), which produces aluminium components used in trains, fell as much as 8.4% to a 2-year low on expectations its orders would be delayed after China ordered an investigation into a train accident.

 

At the lunch break, Midas shares were 6.7% lower at $0.555 with over 39.4 million shares changing hands.

 

However, medical technology firm Biosensors Group (BIOS.SI) outperformed the overall market and rose as much as 2.2% to a two-week high after it reported quarterly earnings that beat expectations, bucking the fall in the broader market.