Bulls and bears

STI sinks to four-year low amid global fears

Regional markets also tumble as worries over oil prices and China's slowdown persist

Local shares fell back into the red yesterday as worries over the global economic outlook continue to show little sign of letting up.

The benchmark Straits Times Index (STI) tumbled 78.70 points, or 2.98 per cent, to 2,559.77 - its lowest in more than four years.

The index is now down more than 11 per cent for the year.

In other regional markets, Tokyo plunged 3.7 per cent, Hong Kong dived 3.8 per cent, Shanghai slid 1 per cent, Seoul was off 2.3 per cent and Sydney retreated 1.3 per cent. Wall Street was little changed on Tuesday, inching up just 0.2 per cent as trading resumed following a holiday.

Since the start of the year, financial markets worldwide have been gripped by fears over the collapse in oil prices and the economic slowdown in China.

"We'll continue to see a tug of war between nervous sentiment and technical indicators showing that falls have gone too far," said Mr Chihiro Ohta, general manager of investment information at SMBC Nikko Securities in Tokyo. "At the root of the selling we've seen this year has been the imbalance of oil supply and demand, so until the oil price moves calm down, the stock market will struggle."


ST GRAPHICS

At home, unsurprisingly, the local banks as well as oil- and gas-related plays stood out among the laggards.

DBS Group Holdings lost 39 cents or 2.7 per cent to $14.09, OCBC Bank dropped 26 cents or 3.3 per cent to $7.66 and United Overseas Bank fell 49 cents or 2.8 per cent to $17.03.

A recent RHB report noted there are growing fears that the three lenders "would soon be hit with rising defaults in their oil and gas exposures", especially as oil prices are likely to stay under pressure.

Sembcorp Marine and its parent company Sembcorp Industries were in active trade on market talk of a possible privatisation of the rig builder. Reuters yesterday cited sources as saying that Sembcorp Industries may inject funds into SembMarine or buy full control of the firm to replenish its strained finances.

Sembcorp Industries slumped 24 cents or 9.4 per cent to $2.30, while SembMarine - the only gainer on the STI for the day - eked out a marginal increase of half a cent or 0.3 per cent to $1.485.

Keppel Corporation dived 35 cents or 6.8 per cent to $4.83, a level not seen since 2009.

Commodity trader Noble Group surrendered its rare gains from the previous day as it plummeted three cents or 10 per cent to 27 cents.

Outside of the blue chips, offshore marine firm Ezra Holdings was hit hard as it tanked 1.2 cents or 17.1 per cent to 5.8 cents on news of a proposed share consolidation. It was also the most heavily traded stock, with 98.7 million units changing hands.

Trading across the bourse came up to 1.09 billion shares worth $1.22 billion.

A version of this article appeared in the print edition of The Straits Times on January 21, 2016, with the headline 'STI sinks to four-year low amid global fears'. Print Edition | Subscribe