STI set for flat open

The index is forecast to continue its slide towards the 3060 resistance-turned-support.

OCBC Investment Research said:

The retreat on Wall Street overnight and the poor Nikkei start (down 0.2% now) are likely keep the local bourse on the back-foot this morning.

As a recap, the STI initiated an unexpected pullback yesterday to close 0.1% lower despite gaining as much as 0.6% during the day.

And with today’s tone likely remain more downside biased, we could see the index continuing its slide towards the 3060 resistance-turned-support.

Below that, the next base lies at the 3020 resistance-turned-support. On the upside, 3080 (various peaks) is the immediate obstacle to overcome, with the subsequent hurdle pegged at the 3110 key peak.

IG Markets Singapore meanwhile noted:

In Singapore, Olam looks set to steal the show again today with its bond and warrants capital rights issue announced last night. Although still sticking to his guns that this was not liquidity that Olam requires immediately CEO Sunny Verghese claimed that this would help eliminate any lingering doubts.

In a move hoped to put pressure on short sellers, as lenders of the stock recall their positions to partake in this attractive bond offer, which has 6.25% yield to par value and is also being at a 5% discount to par value.

If that wasn’t attractive enough the sweetener of a warrant that can be converted in just under 3 years at an equivalent share price of US$1.291 a share, which at current exchange rates is approximately where the share is priced today.

The second largest shareholder in Temasek has fully support the move by stating they will take their full allocation and any surplus from shareholders who elect not to participate. This support again would invaluable in supporting the share price when Olam resumes trading this morning.

Local traders may get more news on Singapore Airlines’ divestment of its 49% stake in Virgin Atlantic. Delta is believed to be one of the interested parties looking to free SIA of its failed partnership with Virgin. But with SIA looking to get back a fraction of the £600 million it originally invested, it may not be in any hurry to sell just yet.

The futures market points to a flat open for the STI this morning.