Banks lead falls, as ST Index closes 3.7% lower after shedding as much as 5.2% in the morning
STOCKS here were hammered for the second day in a row yesterday, as the spectre of a credit crunch caused by the US sub-prime mortgage crisis refused to go away. The Straits Times Index (STI) dived 121.09 points or 3.7 per cent to end at 3,152.16, extending a 3.3 per cent loss on Wednesday.
Just before the morning trading session ended, the index plunged as much as 5.2 per cent, led by falls in the banks and other heavyweights including Singapore Exchange (SGX) and rig-builder Keppel Corp.
Despite a brief recovery after the lunch-time break, the index never traded above 3,165 for the entire afternoon session - a full 3.3 per cent below Wednesday's close of 3,273.25.
The banks led declines among the blue chips, dragging the index down by a total of 38.5 points, or about one-third of the fall in the STI.
Shares in United Overseas Bank fell the most among its peers, ending 4.8 per cent lower at S$19.90. DBS Group closed 3 per cent lower at S$19.60, while OCBC fell 4.2 per cent to S$8.
Keppel Corp's shares shed 5.8 per cent to S$11.30, pulling the STI down by 11.2 points.
Meanwhile, SGX saw its shares dive 7.8 per cent to S$8.25, causing the index to shed 10.7 points. On Wednesday evening, it issued a statement 'to clarify the impact of current market volatility on our externally managed funds', saying it had decided last month to liquidate S$139 million worth of investments in 14 funds. It said there would be 'no material impact' on its current financial year, which started in June.
CIMB analyst Kenneth Ng said in a report yesterday that potential losses to SGX from these funds were 'not an issue' and warned that a decline in trading volumes was a bigger worry. 'If the current credit crunch drains out liquidity from the global system and if trading volumes decline towards previous levels, SGX's earnings could be at risk.'
But he maintained his 'outperform' rating on the stock, noting that 'market sell-downs are bad for investors but market volatility is good for exchanges'.
Of the STI's 49 members, just four stocks rose, while 43 fell. Two stayed unchanged. The biggest percentage losers among the blue chips were shipping groups Cosco Corp, which plunged 11.3 per cent to S$4.10, and Neptune Orient Lines, which dived 9.4 per cent to S$4.06.
Other STI component stocks that saw large percentage falls were Chinese meat producer People's Food and gaming firm Genting International. People's Food shares slid 9.3 per cent to S$1.17, while Genting's shares ended 8.6 per cent lower at 69.5 cents.
The four blue chips that rose against the broader tide of red ink yesterday were Jardine Matheson, Jardine Strategic, Singapore Petroleum Co and StarHub.
Jardine Matheson's shares rose 2.2 per cent to US$23.10 after it said on Wednesday evening that its first-half net profit rose 44 per cent to US$793 million. It also announced plans to buy up to 1.7 per cent of Jardine Strategic, its holding company, whose shares rose 5.5 per cent to US$13.50 on the news.
The broader market was also weak, with falling counters outnumbering gainers 605-28, excluding warrants and bonds. Total trading volume, including warrants and bonds, came to 2.78 billion units worth S$3.3 billion.
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