Shares down at 16-mth low on recession fears

Singapore shares fell to a 16-month low on Friday as worries about a global recession intensified following the U.S. Federal Reserve’s warning of a grim economic outlook and weak manufacturing data from China.

 

By 1:00 p.m., the Straits Times Index (STI) <.FTSTI> was down 1.3%, or 36.27 points, at 2,684.26. Around 910 million shares worth $837 million were traded, compared with 576 million shares worth $592 million that changed hands by the same time on Thursday.

 

Shares of rig builders Keppel Corp (KPLM.SI) and Sembcorp Marine (SCMN.SI) lost 1.8% and 3.3% respectively.

 

“Our cautious stance is unchanged as we expect lingering external uncertainties to affect market sentiment,” said UOB Kay Hian. “Being an open economy, Singapore’s 2012 GDP growth outlook has been curtailed and this will eventually lead to earnings downgrades.”

 

UOB Economic Treasure Research recently cut its 2012 GDP growth forecast to 4.5% from 5.0%, but the consensus expects a wider range of 2.0-6.5%, UOB Kay Hian said.

 

DBS Vickers also said in a report that if the 2008 global financial crisis were to be repeated, plantation stocks could have 20-80% downside from current levels.

 

The brokerage cut its target prices on Singapore-listed palm oil producers Wilmar International (WLIL.SI) to $5.60 from $6.25 and on Indofood Agri Resources (IFAR.SI) to S$1.35 from $1.75, citing limited upside to the stocks.

 

By around 1:00 p.m., Wilmar and IndoAgri shares were down 2.1% and 2.2% respectively.

 

However, UOB Kay Hian said that the market could potentially bottom out in either the first or the second quarter of 2012, after which sectors such as banking and property are expected to outperform.

 

On Friday, shares of Singapore offshore services firm Swiber Holdings (SWBR.SI) bucked the weak market trend, jumping as much 5% after announcing it had won a US$155 million ($201 million) contract for a project in South Asia.

 

The company added in a statement that its order book is now close to US$1 billion. At around 1:00 p.m., Swiber shares were up 3% at $0.52 on a volume of 6.3 million shares, 1.1 time the average daily volume in the last 30 days.