STI hits 3-year low as bears prevail

The Straits Times Index shown in SGX Centre.
The Straits Times Index shown in SGX Centre. ST PHOTO: ONG WEE JIN

Index has fallen some 20% since April peak; more carnage feared in data-heavy week

The bears are officially ruling the roost in the local share market after yet another day of red ink yesterday.

Nervous investors were bailing out from the word "go", sending the Straits Times Index (STI) down 1.44 per cent to 2,791.92 at the close, its lowest since June 2012.

It also leaves it in bearish territory, with the STI having fallen some 20 per cent from its recent peak of 3,539 points in April.

Investors have been dreading the market falling below the 2,800- point level but now that this support base has been breached, many fear more carnage to come, not that there has been any shortage of bloodletting.

The STI dived 0.46 per cent last Friday to leave it down 1.63 per cent for the week, so yesterday's fall hardly came from out of the blue.

Remisier Desmond Leong said: "It's not looking good. This looks to be the third leg down this year after the July-August crash triggered by the Chinese yuan devaluation.

GLOOMY OUTLOOK

It's not looking good... Now we must wonder whether STI will test and break the 2,700 level held since late 2011.

MR DESMOND LEONG, remisier

"Now we must wonder whether STI will test and break the 2,700 level held since late 2011."

IG market analyst Bernard Aw said: "In recent weeks, we have seen the STI keep breaking its moving average. As we head into a data- heavy week, investors will remain jittery."

Investors will be eyeing the Bank of Japan's corporate sentiment survey on Thursday and the US non-farm payroll data on Friday, after having already digested news yesterday that China's industrial profits fell 8.8 per cent last month.

There is gloom closer to home as well, with concern that the local economy is heading for a technical recession after new non-oil domestic exports and industrial production figures fell more than expected.

There may be some breathing room in the coming days when the Chinese markets close for the Golden Week holiday.

"That means there will be less bad news and bearish signs to worry about and hence less downward pressure, at least temporarily," Mr Leong said.

While the US economy has shown further signs of recovery, Asia's outlook is deeply mired in uncertainties as China's slowdown takes effect.

Regional markets also performed poorly yesterday. The Shanghai Composite fell to its lowest since Sept 16 during the day before it found its footing and closed 0.27 per cent up. Japan's Nikkei pared 1.32 per cent while Kuala Lumpur dropped 0.41 per cent.

A version of this article appeared in the print edition of The Straits Times on September 29, 2015, with the headline 'STI hits 3-year low as bears prevail'. Print Edition | Subscribe