Regional bourses back in the red over global economic worries, STI closes 78 points down

SINGAPORE - Singapore equities fell back into the red on Wednesday, as worries over the global economic outlook continue to show little signs of letting up.

The benchmark Straits Times Index (STI) tumbled 78.47 points, or 2.97 per cent, to 2,560 - its lowest in more than four years. This brings the index down more than 11 per cent for the year so far.

Other markets in the region bore similar fates: Tokyo plunged into bear market with a 3.7 per cent drop, while Hong Kong slashed 3.8 per cent. Shanghai slid 1 per cent, Seoul fell 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.

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

The International Monetary Fund cut its world growth outlook in its latest update, while the International Energy Agency said oil markets could "drown in oversupply", driving prices of the commodity back down to levels of US$28 a barrel.

"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 Inc 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."

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 S$14.09, OCBC Bank dropped 26 cents or 3.3 per cent to S$7.66 and United Overseas Bank fell 49 cents or 2.8 per cent to S$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 rigbuilder. A Reuters article 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 S$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 S$1.485.

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

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 units changing hands.

Trading across the bourse came up to 1.07 billion shares worth S$1.22 billion.

tsjwoo@sph.com.sg