Dec 17, 2014

    Bumpy ride for investors as STI takes big hit

    THE last full trading week of the year looks like it could be the bumpiest as well, with shares posting their sharpest daily percentage drop in 18 months yesterday.

    The benchmark Straits Times Index fell 2.4 per cent or 79.05 points to 3,215.09 on the back of the continued crash in crude oil prices.

    Local investors have not seen a drop that big since June 20 last year, according to Bloomberg data, when news broke that the United States Federal Reserve may reduce its monetary stimulus programme later that year if the economy continued to improve.

    The culprit this time was oil. Brent crude prices shed US$1.43 to US$59.63 in London yesterday, tumbling below the US$60 mark for the first time since the middle of 2009.

    This sparked a further selldown in the US and Europe, which naturally spilled over to Asian markets.

    Signs that Chinese manufacturing activity may weaken also weighed heavily on investors across the region.

    HSBC's unofficial index of manufacturing activity in China came in yesterday at 49.5 for this month, compared with 50 last month. This was a seven-month low, and a bigger decline than analysts had expected. A reading below 50 points to contraction while anything above indicates growth.

    Hong Kong responded by falling 1.6 per cent while Japan's Nikkei lost 2 per cent and Seoul shed 0.9 per cent.

    But in spite of that gloomy figure for the world's No. 2 economy, Shanghai shares climbed 2.3 per cent yesterday, which analysts said was mostly due to hopes that the Chinese government will introduce new measures to boost economic growth.

    The market here was largely dragged down by banks and commodity plays, while rigbuilders languished near multi-year lows.

    The biggest losers included casino operator Genting Singapore, conglomerate Jardine Cycle & Carriage and the three local banks.

    Genting, which was also one of the most active stocks, slid 5.1 per cent or 5.5 cents to $1.03, with 36.7 million shares traded. Jardine C&C lost 3.7 per cent or $1.52 to $39.94.

    All three banks slipped as well: UOB fell 3.5 per cent or 84 cents to $23.25; OCBC declined 3.2 per cent or 33 cents to $10.10 and DBS slipped 3.1 per cent or 61 cents to $19.17.

    It was a mixed day for rigbuilders Keppel Corp and Sembcorp Marine.

    Keppel closed two cents lower at $7.98 yesterday while Sembcorp Marine inched up two cents to $2.89 - but still its lowest since July 2009.