Concerns over China's shaky stock market and bearishness over reports that the country's hunt for "malicious short-sellers" may have reached Singapore, sent local stocks into free-fall yesterday.
Shares plummeted about 1.98 per cent, or 64 points, at the opening, and continued bleeding all day although they managed to claw back some ground by the close. By the time the dust had settled, the STI was down 1.45 per cent, or 47.02 points, to close at 3,202.50, leaving it down 4.5 per cent for the week, and off nearly 5 per cent from Jan 2.
July was an awful month for equities, with Singapore-listed firms losing $37.4 billion, or 3.9 per cent of their total value, to $927.9 billion from $965.3 billion in June. Market capitalisation was down 5.2 per cent from $978.7 billion a year ago.
Yesterday's carnage was led by banks and Singtel, while short-sellers and investors kept hammering commodities trader Noble Group. While investors are jittery about issues ranging from looming interest rate hikes to the Greek crisis, the mayhem in China's share market in recent weeks is the biggest worry.
Reuters yesterday said that China is asking off-shore and international brokerages in Singapore and Hong Kong to hand over share trading records as it pursues investors shorting Chinese stocks to overseas jurisdictions.
The Chinese brokerages and foreign financial institutions cited by Reuters said Chinese regulators were focusing on positions taken through the Shanghai-Hong Kong Stock Connect trading link and via offshore-listed products that track mainland stocks, including index futures and exchange-traded funds.
Mr Vishnu Varathan, senior economist for Mizuho Bank here, said the move shows how serious China is about stemming the market rout, estimated to have wiped out US$3.5 trillion (S$4.8 trillion) in value.
Both the Monetary Authority of Singapore and Singapore Exchange said they could not comment.
Here in Singapore, short-sellers continue to maul Noble's shares, taking advantage of the fact that the firm is barred from buying back its stock during a blackout period before its second-quarter earnings release on Aug 13.
Noble has been aggressively buying back its shares to shore up investor confidence - it has spent $131 million since June 12 - but is making little headway against the shorts. The stock has fallen 34 per cent since the buybacks began. Noble has lost 23 per cent, or 13.5 cents, since Wednesday when the short- selling attack started, closing at 45.5 cents yesterday.
An analyst who covers Noble said the outstanding borrow on Noble shares - stock held by short-sellers - has now skyrocketed to 600 million shares from around 50 million in mid-April, hitting nearly 15 per cent of its free float.
Former Temasek senior managing director Michael Dee said investors are also bailing out partly because of "fears that Noble will be dropped from the indices due to the collapse in value relative to the STI over the past year". Its market capitalisation has shrunk to $2.97 billion, down from $7.6 billion at the start of the year, according to Bloomberg data.
