ST Index Plunges To Lowest In Four Months

Source : The Straits Times, Thu, Aug 16, 2007

CONCERNS over the credit crisis in the United States and fears that it may trigger a recession there sent Singapore shares plunging 3.3 per cent yesterday.
The Straits Times Index (STI) plummeted 113.34 points to close at 3,273.25 - its third-largest one-day plunge so far this year and its lowest point in more than four months.

Volume totalled only 2.43 billion shares worth $2.61 billion, a relatively moderate amount and one that signals the intention of investors to stay on the sidelines.

Losers unsurprisingly led gainers 798 to 148.

The market headed south from the start, diving nearly 70 points in opening trade, following the 207.61-point overnight fall on Wall Street that was prompted in part by a lower profit forecast from Wal-Mart Stores.

As was the case with the other regional bourses, retail investors and fund managers in Singapore scampered for cover, fearing that the US housing slump was spreading beyond credit markets and dampening consumer spending.

The three Singapore banks were the worst-hit. They shaved almost 40 points off the STI between them while DBS Group Holdings ended as the day's top loser.

DBS' stock shed $1 or 4.7 per cent to $20.20, United Overseas Bank's share price dipped 60 cents to $20.90, while OCBC Bank's shares dropped 35 cents to $8.35.

Property plays also fell on speculation that the sub-prime mortgage woes will raise borrowing costs and affect sales.

Private equity firms have made fewer inquiries on investment properties, said City Developments (CDL) executive chairman Kwek Leng Beng in an interview on Tuesday.

Yesterday, CDL's share price nose-dived 50 cents to $14.10 despite the developer reporting a day earlier that its second-quarter net profit swelled from $44.9 million to $194.4 million.

CapitaLand's shares fell 35 cents to $6.90, while Keppel Land's stock slid 20 cents to $7.90.

Penny stocks mirrored the STI's fall with the UOB Sesdaq Index falling 3.1 per cent, or 7.37 points, to 227.38.

The stock of Sunmart Holdings, which makes spray pumps, made its debut and was the most heavily traded with 85 million shares changing hands. It closed at 26 cents - a one-cent premium over its offer price.

'With such a situation going on, a lot of investors are adopting a short-term view of the market,' Fraser Securities research head Najeeb Jarhom told Agence France-Presse early yesterday

He expects the STI to fall another 5 per cent before it stabilises.

Credit Suisse Asia-Pacific chief strategist Arjuna Mahendran told The Straits Times: 'Expect more adverse news from the US in the next few weeks. The STI should correct to about 3,200, then it'll start to stabilise.'