STI closes weaker for fifth straight trading session

AFTER the bloodletting earlier in the week, yesterday's slight dip in the market would have seemed like a minor flesh wound for battle-scarred investors.

The damage was a mere 13.84-point fall - just 0.4 per cent - leaving the Straits Times Index (STI) at 3,078.74.

It was the fifth straight day of losses but even combining yesterday's drop with Thursday's decline, the fall over two days was only 25.41 points. This is a fraction of the heart-stopping decline of 203.77 points, or 6.2 per cent, recorded on Tuesday and Wednesday.

But memories of Wednesday's meltdown clearly have not faded, with the STI opening 30 points lower at 3,062.29 yesterday.

The market showed some signs of rebounding, climbing to an intra-day high of 3,105.16 around noon, but soon gave up the recovered ground and spent most of the afternoon between 3,060 and 3,080.

Analysts say that while investors might have had a fright this week, the selldown was not surprising given the huge increases over recent months.

'Singapore's economic prospects remain sound. While everything on the ground seems to be in good shape, the big problem we have today is valuations,' said CIMB-GK research head Song Seng Wun.

'We see the recent correction as a valuation scare and not a change in fundamentals.'

Mr Song, who raised his year-end STI target from 3,080 to 3,400, noted that the benchmark index has risen 36 per cent since August last year and was trading at its peak of 17.6 times the price-earnings ratio on Tuesday.

Losers led gainers by 407 to 305 yesterday, with 2.15 billion shares worth $2.37 billion changing hands.

Developer CapitaLand lost 35 cents to $6.85, while Keppel Corp retreated 30 cents to $17.50. Singapore Exchange shed 25 cents to $6.50 and Singapore Land finished 15 cents lower at $9.20.

The top gainer was United Overseas Bank, which advanced 40 cents to $20.50, reversing Thursday's 30-cent loss.

The stocks of jewellery retailer Gems TV gained 17 cents, or 11.4 per cent, to $1.66 after its Thai subsidiary received an eight-year tax exemption on profit derived from jewellery production.

Jardine Cycle & Carriage shrugged off a 21 per cent drop in net earnings to US$223.8 million (S$342.1 million), to finish at $12.50, up 20 cents.

Hotel Properties rose 30 cents to $3.60 on speculation that the firm had won the bid to host Formula One motor racing in Singapore.

Most active were the stocks of casino operator Genting International, which rose 5.5 cents to 83 cents, after the company paid the final $605 million instalment to get construction under way for the Sentosa integrated resort. Volume was 142.2 million shares.

arthurp@sph.com.sg