Sell-off in blue chips sends S'pore bourse to 19-week low
A SELL-OFF by institutional funds repositioning themselves to ride on the roaring Chinese bourses sent Singapore shares sinking to a 19-week low yesterday.
The benchmark Straits Times Index plummeted 51.36 points or 1.51 per cent to 3,340.75, with 1.48 billion shares worth $1.62 billion traded.
"Given the magnitude of the drop in blue chips like Singtel, DBS Bank, United Overseas Bank and OCBC Bank, it appears a few key funds are selling down their Singapore portfolios and repositioning funds in China," CMC Markets analyst Nicholas Teo said.
"But we may see bargain hunting resume over the next few days."
Stocks dragging down the bourse included Singtel, which sank 3.6 per cent or 15 cents to $3.98, with 56 million shares traded; DBS Group Holdings lost 2.2 per cent or 45 cents to $19.85, UOB shed 2.3 per cent or 54 cents to $22.60 and OCBC fell nearly 2 per cent or 20 cents to $10.
Banking counters were among the top losers after one of the Federal Reserve's leading regional members on Monday said the United States recovery is too weak to justify a rise in interest rates.
Consumer spending growth unexpectedly stalled in April as households cut back on purchases of cars and continued to boost savings.
Eric Rosengren, president of the Boston Fed, said the conditions for beginning monetary policy tightening have not been met.
He is a non-voting, alternate member of the policymaking Federal Open Market Committee.
Even as rising crude palm oil prices and the El Nino weather phenomenon helped boost palm oil plays, Noble Group, one of the most actively traded stocks yesterday, sank 6.3 per cent or five cents to 74.5 cents, with 59.8 million shares traded following recent disappointing results and alleged accounting irregularities.
"Noble broke through key support at 82 cents and just kept sinking," Mr Teo said.
Golden Agri-Resources jumped 2.4 per cent or one cent to 43 cents, with 41.2 million shares traded, while Wilmar International rose 0.6 per cent or two cents to $3.38.
Speculation that China could further cut its benchmark interest rates sent Singapore-listed S Chip Debao Property up 42 per cent or 2.1 cents to 7.1 cents, with 68.8 million shares traded.
Last month, China cut interest rates for the third time in six months amid a worse-than-expected economic slowdown.
The Singapore Exchange, which sank 3.2 per cent or 27 cents to $8.16, said yesterday it is not aware of any information that could have caused its stock to fall more than 6 per cent from the closing price of $8.72 on May 27.
IG market strategist Bernard Aw noted that waning liquidity has been an ongoing bugbear, and the "deafening silence concerning the successor to (chief executive Magnus Bocker) is not helping matters".