S'pore bourse falls for sixth straight day

STI's longest period of losses since last June; early rebound fizzles out

THERE was little respite from the red ink on the local bourse yesterday as nervous investors headed for the exit for the sixth day running.

An early rebound fizzled out in late trading with blue chips coming under selling pressure from European fund managers, who helped turn the benchmark Straits Times Index's (STI) gain of 23 points into a loss of 34.07 points.

The STI's six-day losing streak - which saw it close yesterday at 2,706.26 - is now the index's longest period of losses since June last year. At that time, Asian equity markets struggled to find their footing as concern grew that the green shoots then sighted were illusory.

Traders triggered the latest extended bear run by switching out of riskier assets into cash, while they waited for the dust to settle on developments that have so spooked regional markets of late.

What particularly alarmed traders was China's attempt to cool its overheating economy by forcing lenders to retain more cash and scale back their lending. The impact that this dramatic move might have on the buoyant Shanghai stock market stopped everyone in their tracks.

Traders also preferred to keep to the sidelines ahead of the United States Federal Reserve's rates-fixing meeting this morning. While no change in interest rates was anticipated, traders were on the look-out for hints of any policy change the Fed might make going forward.

What added to the overall mood of caution was the pending US Senate's vote - due today - on Mr Ben Bernanke's confirmation as Fed chief for a second term.

Given the turmoil on Wall Street last Friday when his nomination was first thrown in doubt, some traders simply wanted to play it safe and stay out of the market until the voting result was known.

Despite the six-day sell-off, the local bourse has managed to display a lot more resilience than other regional bourses.

Hong Kong's Hang Seng has fallen by a hefty 12.7 per cent since it peaked in November - technically a market correction given that it has corrected by more than 10 per cent from its previous peak.

Some research houses, however, can detect a silver lining in the chaos.

CIMB, for instance, thinks short-selling might have played a part in the market turmoil. This could set the stage for a technical rebound, as traders cover their short positions. 'In the meantime, it might still be too early to get into a shopping mood,' it added.

Among yesterday's biggest losers was CapitaLand, which fell 12 cents to $3.74 on a hefty volume of 50.9 million shares.

Banks were also on the retreat, with DBS Group Holdings falling 22 cents to $14, OCBC Bank dropping 12 cents to $8.08, and United Overseas Bank losing 14 cents to $17.92.

Keppel Corp, however, gained seven cents to $8.16, buoyed by news that it was spinning off its 'green' infrastructure assets into a business trust that is slated for listing within the next few months.

Source: Straits Times, 28 Jan 2010.