Oct 14, 2014

    STI drops to 6-month low on global gloom

    LOCAL shares fell to a six-month low yesterday on fears that the global economy is heading into stormy weather.

    The air of pessimism that marked the end of last week worsened to send the Straits Times Index (STI) down 21.72 points or 0.67 per cent to 3,202.15, extending Friday's 1.09 per cent fall.

    That was the lowest it has been since the 3,198.23 point close on April 11, when markets were led lower by Wall Street.

    About 1.25 billion shares worth $894.4 million changed hands.

    Regional shares were also mostly lower: Shanghai fell 0.4 per cent, Sydney lost 0.6 per cent and Seoul declined 0.7 per cent.

    Hong Kong bucked the trend to close 0.2 per cent higher after dropping by as much as 1.3 per cent, while Tokyo was closed for a public holiday.

    Bourses were mostly in the red despite data showing China's exports rose 15.3 per cent last month from a year earlier.

    Remisier Desmond Leong told The Straits Times that investor sentiment has turned negative since the United States market became more volatile.

    "The US rally has been going on for a while, so the correction is to be expected and everybody is still staying cautious. Even with good data, people are just afraid and will look for any reason to justify the selldown," he added.

    The Chicago Board Options Exchange Volatility Index - commonly used to measure investor concerns - spiked on Friday to levels not seen since December 2012.

    Fears that lofty share valuations in the US are not sustainable, and weak growth in Europe, China and Japan have added to the bearish sentiment.

    The top volume counter here was real estate firm Top Global, which closed unchanged at 0.8 cent with 133.6 million shares changing hands.

    Cyclical stocks dependent on growth in the global economy, such as banks, were among the biggest decliners.

    DBS dropped 24 cents to $17.99, OCBC fell by five cents to $9.69 and United Overseas Bank lost seven cents to $22.12.

    Oil and gas plays continued their decline in the wake of crude oil prices diving 5.1 per cent last week, raising fears that demand for rigs may level off.

    Keppel Corp dropped five cents to $10.01 - a price not seen since November 2012, when the stock fell to $9.91.

    SembCorp Marine lost two cents to $3.64 despite winning a US$696 million (S$884 million) contract.

    OCBC Investment Research analyst Low Pei Han has kept a buy call on SembMarine, saying the selling has been overdone.

    Profit warnings issued by luxury car distributor EuroSports Global and rubber producer GMG Global added to the downbeat corporate earnings sentiment.

    EuroSports Global dipped two cents to 24 cents while GMG fell by 0.3 cent to 6.2 cents.