Bulls And Bears

Blue chips bear the brunt of market rout

All 30 STI component stocks in the red as panicky local investors join global sell-off

Local shares suffered their worst one-day plunge in seven years yesterday as the panic on global markets sparked a massive sell-off.

The benchmark Straits Times Index plunged 4.3 per cent, or 127.62 points, to close at 2,843.39, with around 1.8 billion shares worth $1.77 billion changing hands.

It was downhill from the opening bell, with no let-up in the bloodbath until the market closed, with all 30 STI constituents ending in the red on a trading day reminiscent of the worst of the 2008 financial crisis.

The pain was centred on blue chips: DBS dived 3.5 per cent, or 64 cents, to $17.65; OCBC shed 4.4 per cent, or 40 cents, to $8.70; Singtel dropped 4.1 per cent, or 16 cents, to $3.78; Jardine Matheson was off 5 per cent, or US$2.56, to US$48.57; and Hongkong Land slipped 6.9 per cent, or 50 cents, to $6.75.

Commodity firms Golden Agri- Resources and Noble Group were among the most actively traded.

Golden Agri fell 6.5 per cent, or two cents, to 29 cents, with 55.9 million shares traded.

Meanwhile, Noble plunged 7.9 per cent, or 3.5 cents, to 41 cents, with 43.9 million shares traded.

"There is a lot of fear in the markets. There is talk that the repeat of the China stock market decline may force more devaluation of the yuan, which could ignite a so-called currency war in the emerging markets," IG market strategist Bernard Aw said.

Phillip Futures investment analyst Howie Lee noted: "It may be an ominous foreboding of things to come. China's sudden step out to devalue its yuan brought this uncertainty sharply into view, which was not helped by the Fed's turn to bearishness in its latest minutes.

"While the index ended last week below the psychological 3,000 level, the steep fall in the US market on Friday precipitated the slump that we saw (yesterday)... We may be seeing more downward pressure in the coming sessions.

"Therefore, bargain hunters should beware. The 2,800 level will be the next key support to watch."

S-chip 8Telecom International managed to buck the trend.

It jumped 19 per cent, or 12 cents, to 75 cents after announcing it has entered into a conditional sale- and-purchase deal to sell its entire interest in two subsidiaries to Manfaith Investments for 420 million yuan (S$95.6 million).

Pacific Andes Resources and its subsidiary, China Fishery Group, continued to see selling pressure following their announcement last week that they are being investigated by the Monetary Authority of Singapore and the Commercial Affairs Department for an offence under the Securities and Futures Act.

Pacific Andes sank 16.7 per cent, or 0.5 cent, to 2.5 cents, with 26 million shares traded.

It owns 70 per cent of fishmeal producer China Fishery, whose shares plunged 19.4 per cent, or 1.4 cents, to 5.8 cents, with 24.6 million shares traded.

A version of this article appeared in the print edition of The Straits Times on August 25, 2015, with the headline 'Blue chips bear the brunt of market rout'. Print Edition | Subscribe