Commodity bust leads investors to flee, Asian markets down, STI closes 4 points down

Investors bailed out of an increasingly fragile commodity sector amid fears over China's slowdown, with the benchmark Straits Times Index dipping for the fifth consecutive session by 3.98 points or 0.14 per cent.
Investors bailed out of an increasingly fragile commodity sector amid fears over China's slowdown, with the benchmark Straits Times Index dipping for the fifth consecutive session by 3.98 points or 0.14 per cent.PHOTO: AFP

SINGAPORE - Asian markets were again caught in a sea of red on Tuesday (Sept 29), as investors bailed out of an increasingly fragile commodity sector amid fears over China's slowdown.

Singapore equities took a hit as well, with the benchmark Straits Times Index dipping for the fifth consecutive session by 3.98 points or 0.14 per cent to 2,787.94. But this was a bounceback from an intraday low of 2,740 points.

Elsewhere, Japan fell 4.05 per cent, while Shanghai slid 2 per cent.

Hong Kong, which resumed trading following a public holiday on Monday, dropped 2.97 per cent to a two-year low.

The downbeat sentiment in the region mirrored that in Wall Street, where the Dow Jones Industrial Average shrank 1.92 per cent overnight, dampened by numbers that showed weak industrial profits in China.

Stocks in the United States had received little support from the Federal Reserve's decision to hold off hiking interest rates on Sept 17.

At home, the losses were led by local commodity stocks, which suffered huge collateral damage following the pummelling in mining and trading firm Glencore.

Trading giant Noble Group came off the worst among the blue chips, sinking as much as 15 per cent during the day.

The stock, which has been targetted by short-sellers over its accounting practices, closed 4.5 cents or 10.1 per cent down at 40 cents - its lowest since 2006.

It was the most heavily traded, with about 122 million shares changing hands.

Wilmar International, the world's largest oil palm firm, slid eight cents or 3.1 per cent to S$2.52 - a level last seen during the global financial crisis in 2009.

Oil and gas plays took a hit as well with rigbuilder Keppel Corporation losing one cent or 0.15 per cent to S$6.75 although Sembcorp Marine was unscathed, rising one cent or 0.44 per cent to S$2.26.

The immediate spark was Glencore, whose shares plunged almost 30 per cent to a record low in London on Monday on concerns over the firm's debt amid an ongoing collapse in global metal prices.

Its Hong Kong-listed shares followed suit yesterday, tumbling 29.3 per cent.

"What happened with Glencore was certainly a trigger for these commodity stocks," IG market strategist Bernard Aw told The Straits Times.

"It's a contagion effect - investors are lumping them together with the problems in Glencore and more broadly, the mining stocks."

Mr Aw added that commodity counters will likely remain "under a lot of pressure as long as the global economic outlook is looking sluggish".

tsjwoo@sph.com.sg