STI at lowest close since August 2003

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March 3, 2009
BULLS AND BEARS
STI at lowest close since August 2003
Bourse down almost 13% for the year, half what it was a year ago
By Alvin Foo, Markets Correspondent

FRESH investor worries over the health of financial institutions worldwide combined with growing regional gloom yesterday to drive Singapore stocks down to their lowest level since August 2003. A sea of red smothered the local bourse, seen most vividly in a heavy selldown of financial stocks and some other blue chips.

The benchmark Straits Times Index (STI) slumped 61.47 points, or 3.85 per cent, to close at 1,533.40 - its biggest one-day points drop since last November.

The STI has now sunk nearly 13 per cent for the year, and is about half the value it was a year ago.

'It's the worst mood I've seen so far this year,' said a dealer. 'Everybody was just waiting to get out, with some panic selling seen in the banking counters. It was a sombre session.'

Wall Street's 1.66 per cent fall last Friday set the scene for a weak opening here, and the STI's cause was not helped by the downbeat mood in the region.

Hong Kong stocks retreated 3.86 per cent, Japan's Nikkei 225 index dropped 3.81 per cent, while Australian shares declined 2.82 per cent.

The misery was compounded by a sluggish start for European shares and US stock futures trading sharply in the red, signalling a likely poor opening for Wall Street last night.

Dealers said short-selling - a technique of profiting from falling stock prices - of bank stocks and some other blue chips was also partly to blame for the gloom.

The spotlight fell on the three bank counters, which combined to shave nearly 30 points off the index.

United Overseas Bank sank to its lowest finish since 2003. It was the biggest loser among the STI's 30 component stocks, losing 74 cents, or 7.4 per cent, to $9.25. DBS Group Holdings shed 43 cents to $7.41, while OCBC Bank dropped 32 cents to $4.16 - both near six-year lows.

Citigroup noted: 'Singapore banks are also unlikely to see a sustained rally in our view if global banks do not stabilise, or if there are further major capital needs.'

Property stocks fared no better. CapitaLand was badly hit, slumping 18 cents to $1.80 as investors were worried by dilution from its recent rights issue. City Developments fell 20 cents to $4.60 with Keppel Land six cents behind at $1.24.

Other blue chips which took a tumble included Singapore Exchange, which dived 27 cents to $4.27, and Keppel Corp, 24 cents down to $4.13.

However, there were gains for index heavyweight SingTel, up two cents to $2.48, and palm oil giant Wilmar International, four cents in front at $2.92.

Overall, analysts say a technical rebound could be on the cards later this week after yesterday's sharp selldown.

Mr Najeeb Jarhom, senior vice-president of research at AMFraser Securities, said: 'We should see some technical recovery before Friday and a trading signal should come once 1,500 is broken and 1,474 is tested.'

Others warned of more volatility. CIMB-GK said the STI should 'at least test' the intra-day low of 1,473 seen last October in the near term, 'before a major bottom is reached'.

alfoo@sph.com.sg