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Palm oil stocks led Singapore shares lower at midday on Thursday as analysts expect crude palm oil prices may have limited upside in the near term following a strong rally.
Caution has also returned to the Singapore stock market with investors looking for cues from company results, which are likely to be announced in the next few weeks. Sentiment was also hit as Asian stocks fell due to poor earnings from Wall Street giants.
Caution has also returned to the Singapore stock market with investors looking for cues from company results, which are likely to be announced in the next few weeks. Sentiment was also hit as Asian stocks fell due to poor earnings from Wall Street giants.
“Crude palm oil prices, while relatively high at this point in time, would continue to hold for the next two quarters because the supply is likely to be restrictive for the first half,” said Selena Leong, an analyst at DMG & Partners Research.
Leong added that prices may soften in the second half of the year as the market factors in a potential bumper harvest during a period of peak production.
Shares of palm oil firm Golden Agri-Resources (GAGR.SI) fell as much as 2.6% after J.P. Morgan, which has an “underweight” rating on the stock, said it looked fully valued and there was limited upside to crude palm oil prices.
At midday, Golden Agri shares were down 1.3% at $0.75 on a volume of 208 million shares. Other palm oil counters also fell, with Indofood Agri Resources (IFAR.SI) retreating 2.1% and Wilmar International losing 1.2%.
By the midday break, the Straits Times Index (STI) <.FTSTI> was down 0.67%, or 21.74 points, at 3,220.08. The total value of shares traded in the morning session was $1.1 billion, close to the value on Wednesday.
Local traders said there may be further downside in the afternoon, but support may kick in at around 3,200 points.
Shares of palm oil firm First Resources (FRLD.SI) fell as much as 9.3% after its main shareholder, Eight Capital, sold 75 million shares of the company at $1.48 each.
At midday, First Resources shares were trading at $1.46 on a volume of 121 million shares.
“In terms of financial impact, while there is a gain of around $12.5 million from the sale of treasury shares, it would not be recognised in the form of a one-off gain in the profit and loss statement, but in the balance sheet,” Leong said.
She added that First Resources is looking cheap in terms of valuation, and maintained her “buy” call on the stock with a target price of $2.05.
