NO SOONER does the market show some spark than another bout of bad news clobbers it back down again.
Yesterday, it was inflation concerns after oil rose above the US$100 a barrel mark.
Red ink flowed from the word go. The Straits Times Index (STI) opened lower and kept spiralling downwards, losing more than 78 points by the early afternoon.
Asian markets were also in a similar state of distress. Hong Kong’s Hang Seng was 2.2 per cent down, while Japan’s Nikkei and broader Topix indexes sank more than 3 per cent each. Markets in South Korea, Taiwan, Australia and China were also bruised.
The STI eventually closed down 71.23 points, or 2.3 per cent, at 3,026.83 – an unwelcome gloomy ending after five positive finishes in six trading days.
Volume was low – just 1.59 billion shares worth $1.88 billion changed hands.
‘Investors were discouraged by the early fall and wanted to play safe and stand by the sidelines to watch the show,’ said a dealer.
Telco SingTel led the market’s plunge, falling 14 cents to $3.78 and bringing the index down by a whopping 13.3 points in the process.
Morgan Stanley caused the sell-off, after it downgraded the stock from ‘overweight’ to ‘equal weight’, saying that strong competition from other mobile and broadband operators, as well as government initiatives to open up the broadband industry, pose long-term risk to earnings.
Banking stocks also weighed down the STI, dogged by news of Credit Suisse’s unexpected US$2.8 billion (S$4 billion) in sub-prime write-downs.
DBS Group Holdings was the worst hit, probably also due to profit-taking after six days of gains. It fell 46 cents to $17.90, United Overseas Bank lost 28 cents to $18, while OCBC Bank slipped seven cents to $7.45.
Among the few bright spots were oil-related plays, including Singapore Petroleum Co, up 26 cents to $6.65.
‘With the oil prices back to record highs, we could see a continued rally in offshore and marine stocks,’ a UOB Kay Hian report said yesterday, favouring Keppel Corp, ASL Marine, AusGroup, SembCorp Marine and Cosco Corp.
Source: The Straits Times 21 Feb 08