PROFIT-TAKING on renewed United States recession fears and Wall Street’s overnight dip delivered a one-two punch to abruptly halt the Singapore bourse’s two-day rally yesterday.
A sharp selldown came in the last 30 minutes, as the Straits Times Index (STI) closed 38.66 points lower at 3,038.42, after rising a combined 95 points in the previous two sessions.
A total of 1.55 billion shares worth $1.46 billion changed hands yesterday.
A dealer said: ‘Profit-taking was inevitable, after Monday’s strong pre-Chinese New Year surge and the Dow’s 108-point plunge overnight.’
The chief culprit for the STI’s fall was the financial sector.
Banking counters took a hit after US brokerages downgraded American banks and credit card firms, on signs that consumers are falling behind on debt payments.
United Overseas Bank (UOB) was among the day’s top losers, dropping 38 cents to $18.12. DBS Group Holdings fared no better, slipping by the same amount to $17.60, while OCBC Bank dipped eight cents to $7.55.
DBS Vickers has cut its target price for UOB from $27.50 to $20.80 and that for OCBC from $10.40 to $9.
It noted: ‘While sentiment in Singapore equities remain weak, we believe that earnings momentum for Singapore banks should remain positive, given the strong loans growth and asset quality.’
SingTel came under the spotlight after it announced better-than-expected results for its third quarter. It gained four cents to $3.90 and was the most heavily traded counter by value.
Citigroup said SingTel’s results were ‘better than expected’, while Morgan Stanley kept its ‘overweight’ call, citing healthy operating trends.
AmFraser Securities senior vice-president of research Najeeb Jarhom said: ‘It looks like SingTel may again come to the rescue of the broad market in the event of another downturn after the long holidays.’
There was also cheer for Chinese steelmaker Delong Holdings. It surged a whopping 47 cents, or 30.9 per cent, to $1.99, prompting a query from the Singapore Exchange.
ASL Marine had a bright outing as well, up five cents to $1.30, after the local shipbuilder reported that first half net income rose 67 per cent to $28 million.
The FTSE ST Mid Cap Index slid 0.7 per cent to 784.25 but the Small Cap Index gained 0.1 per cent to 681.31.
Source: The Straits Times 6 Feb 08