Shares slightly up by midday; STX OSV outperforms

Singapore shares held up on Tuesday unaltered by the fall in regional markets as worries of a contagion effect in the euro zone escalated after Italy was downgraded by a notch by ratings agency Standard and Poor’s.

 

At 1:35 p.m., the Straits Times Index (STI) <.FTSTI> was up 0.3%, or 9 points, at 2,766.23. Around 530 million shares worth $357 million were traded earlier in the day, higher than what changed hands the same time on Monday. 

 

Some of the gainers were commodities firm Noble Group (NOBG.SI) and property developer CapitaLand (CATL.SI), each about 1.6% higher in the afternoon.  

 

Traders said there was some short-covering after the STI fell 1.1% in the previous session, and analysts warned the index faces significant downside if Europe crisis deepens. 

 

“Now people are already working out ...assuming Greece would default... (on) ’what’s next?“ said Andrew Chow, head of research at UOB Kay Hian in Singapore. “That’s already the so-called base case for most people.”

 

“(If Greece defaults), it will affect sentiment in the financials and probably Singapore banks will not be spared,” he said, adding that a fall in consumption in Europe and the United States will also affect the rest of the world.

 

Standard and Poor’s cut its unsolicited ratings on Italy by one notch, warning of a deteriorating growth outlook and damaging political uncertainty, in a move that took markets by surprise and added to pressure on the debt-stressed euro zone.

 

A report by analysts at Kim Eng Securities said most healthcare-related stocks in Singapore have outperformed the broader STI since the equity market selloff on Aug 1. “Even in a recession, it would be hard to put off spending on healthcare needs,” it noted.

 

Stent maker Biosensors International (BIOS.SI) has fallen by only 5.5%, compared with a 14.1% drop on the STI, Kim Eng said, adding that hospital operator Raffles Medical (RAFG.SI) has also shown resilience in the last financial crisis.

 

On Tuesday, shares of Singapore-listed offshore vessel builder STX OSV (STXO.SI) jumped as much as 4.8% after the firm secured contracts worth around NOK750 million (166.7 million) to design and construct three trawlers for Aker Seafoods ASA.

 

Around 1:00 p.m., STX OSV shares were up 3.5% at $1.19 as 8.9 million shares exchanged hands.