Market Hit By Property, Bank Fears

Source : The Business Times, November 6, 2007

ST Index suffers 1.2 per cent fall, due also to sharp plunge in Hang Seng Index

SINGAPORE stocks started the week yesterday on a sour note due to renewed fears in the property and financial sectors, and a sharp plunge in Hong Kong's main share index.














The Straits Times Index (STI) ended 45.14 points or 1.2 per cent lower at 3,670.18. Earlier in the day, it fell as much as 2.2 per cent below Friday's close. Around the region, most major share indices also ended lower.

Hong Kong's Hang Seng Index plunged 5 per cent - the largest one-day fall in percentage terms since Sept 12, 2001, the day after the terrorist attacks in the US.

Investors in the Hong Kong market were reacting to Chinese Premier Wen Jiabao's remarks over the weekend, dampening hopes that a plan announced in August to allow mainland Chinese to buy Hong Kong stocks would be approved by Beijing in the near future.

The effects were felt in Singapore, as Hong Kong-based companies in the STI made up three of the top six laggards dragging the index lower at yesterday's close.

Property developer Hongkong Land fell 4.9 per cent to US$4.64, while conglomerates Jardine Matheson and Jardine Strategic fell 4.3 per cent and 4.2 per cent to US$29.20 and US$15.80 respectively.

Singapore-based developers were also hit yesterday, as worries persisted over the impact of the government's withdrawal of the deferred payment scheme for property purchases on Oct 26 to discourage speculative buying.

Among the large developers, CapitaLand fell 20 cents or 2.5 per cent to $7.70, while City Developments finished 20 cents or 1.3 per cent lower at $14.90.

Wing Tai, another developer, saw its share price slide 5.8 per cent to $2.94. It was the largest percentage loser among the blue chips yesterday.

In the banking sector, United Overseas Bank (UOB) led the losses in the STI, falling 50 cents or 2.4 per cent to $20.30 and dragging the index down 8.9 points. UOB's share price has fallen $1.70 or 7.7 per cent since the close of Monday last week, the day before the bank reported its third-quarter earnings.

Its rivals DBS Group and OCBC Bank also saw their share prices dip in intraday trading, as some analysts said they expected to see more dents in the banks' earnings due to further write-downs in the value of their collateralised debt obligation or CDO holdings.

Last week saw a slew of bad news from several major international banks which said they had suffered much bigger losses from the recent credit market turmoil than earlier estimates had suggested. The revelations led to Citigroup chief executive Chuck Prince quitting on Sunday - the latest high-profile casualty of the problems that started in the US sub-prime mortgage market.

Here, DBS's share price closed 20 cents or 0.9 per cent lower at $21.40, while OCBC's share price ended unchanged.

Of the STI's 47 members, 28 fell and nine rose. Technology stocks were among the large gainers. Creative Technology saw the largest percentage gain among the blue chips, ending 5.6 per cent higher at $6.60, while electronics contract manufacturer Venture Corp rose 2.3 per cent to $13.50.

In the broader market, stocks mostly ended lower, with all but one of the SGX market sub-indices registering losses including the UOB Sesdaq index, which fell 7.66 points or 3.3 per cent to 225.58. Only the electronics sector showed a slight gain.

Overall, falling counters outnumbered rising ones by 445-86, excluding warrants and bonds. Trading volume, including warrants and bonds but excluding shares traded in foreign currencies, was 2.24 billion units worth $2.4 billion.