Shares down at midday on Europe woes, financials

Singapore shares slipped 0.74% on Monday as worries about the euro zone debt crisis grew after a series of political setbacks in Europe over the weekend.

Concerns about Singapore slipping into a technical recession also weighed on banking shares, with Southeast Asia's largest lender DBS Group (DBSM.SI) falling as much as 2%.

 

At 1:00 p.m., the Straits Times Index (STI) <.FTSTI> was down 0.74%, or 20.71 points, at 2,768.33. The total volume of shares traded by then was 511.7 million shares and turnover was $397.9 million.

 

This compares with the volume of 711 million shares worth $799.6 million on Friday. Local traders said they expect the STI to find support at 2,720 for the rest of the session.

 

“The market is down largely due to renewed concern over whether Greece will receive its next tranche of bailout, particularly with little progress in the high-level EU meeting over the weekend,” said Ng Kian Teck, lead analyst at SIAS Research.

 

A meeting in Poland with EU finance ministers broke no new ground in dealing with the debt crisis in talks over the weekend.

 

The cancellation of a visit by Greek Prime Minister George Papandreou to the United States to chair an emergency cabinet meeting at home, and a regional election defeat for German Chancellor Angela Merkel, added to a sense of worsening crisis.

 

Shares of Singapore banks were amongst the biggest losers on the benchmark index, with DBS down 2.3% at $12.34 at midday and United Overseas Bank (UOBH.SI) 2.2% lower at $17.39.

 

“In last week’s non-oil domestic export data, we noted a continuous fall in electronic exports and that increased the possibility of a technical recession. Together with the global uncertainties, these factors probably led to profit taking on the banks today,” said Ng.

 

Offshore vessel builder STX OSV (STXO.SI) dropped 5.7% to $1.16, hit by worsening outlook for the offshore and marine industry and fears a liquidity crunch in the global financial system would hurt its earnings.

 

CIMB Research also cut its target price for the company to $1.85 from $1.89 but kept its outperform rating as it expects STX OSV to see minimal order cancellations.