STI plunges 6% in worst one-day fall
since Oct 1987
SINGAPORE'S market yesterday suffered its worst one-day fall since
the Black Monday crash in October 1987 while other Asian bourses
had to go back to the Sept11, 2001, terror attacks for a day as bad
as this.
The Straits Times Index was the region's second-worst performer,
diving a jaw-dropping 187.1 points, or 6.03 per cent, in the
frenzied, fear-driven bail-out. The STI has now fallen 15.8 per
cent since Jan 1, wiping $62 billion off the value of local
shares.
India was the worst performer yesterday, with the Sensex Index
initially plunging 12 per cent before a late recovery brought the
final dip to 7.41 per cent.
Other casualties stacked up across the region - Hong Kong's Hang
Seng Index fell 5.5 per cent, Tokyo's Nikkei-225 was down 3.9 per
cent, and China's resilient Shanghai Composite dived 5.14 per
cent.
The causes were the same factors that have been hammering markets
for months - a possible recession in the United States and concerns
that regional banks will be hit by the massive writedowns that have
belted Western banks.
'Irrational fear is stalking regional markets. Fundamentally,
things haven't changed, and the economy is humming along nicely,'
said CIMB-GK research head Song Seng Wun.
One dealer said hedge funds - powerful investment vehicles with
billions at their command - were trimming their positions across
the region ahead of possibly more bad news from the US.
'With the US markets closed for Martin Luther King Day, the funds
are left rudderless as they struggle to find directions in the
gloom and this is exacerbating the panic selling region-wide,' he
said.
Financial shares took the biggest hit. Bank of China and HSBC
Holdings came under heavy attack, with investors spooked by fears
of their balance sheets being hurt by big sub-prime writedowns,
following Citigroup and Merrill Lynch's massive losses.
DBS Group Holdings was one victim here, falling an eye-popping
$1.18 to a 17-month low of $17.50. But SingTel's 7.7 per cent slide
to $3.58 and Keppel Corp's 5.6 per cent fall to $10.80 stunned
investors as well.
European markets were also well down when they opened yesterday
afternoon. Financial stocks there sank on concerns of their
possible exposure to the bond insurance market, which has been
tainted by the US mortgage crisis.
At close, London's FTSE-100 Index was down 5.48 per cent, Paris'
CAC Index fell 5.88 per cent, while Frankfurt's Dax Index tumbled
7.16 per cent.
Even booming commodities markets suffered. Oil fell US$1.68
(S$2.42) to US$88.98 a barrel on fears of falling demand if the US
slips into recession, and gold fell US$13.17 to US$870 an
ounce.
However, anxiety over the US economy may be soothed over coming
weeks if the financial results of multinationals such as Microsoft
and AT&T are robust.
'But more disappointing earnings could send stock prices down
further, as they fuel the risk of a recession,' warned Deutsche
Bank Private Wealth Management's chief Asian strategist Marshall
Gittler.
But some traders here saw yesterday's nosedive as a golden
opportunity to pick up blue chips like DBS and UOB. 'I view this
sell-off as the last shoe dropping and I am sinking all my
remaining funds into blue chips,' said local remisier Bernie
Tan.
