Asian bourses took another tumble yesterday, as traders in the region woke up to a second straight session of sell-offs on Wall Street overnight on Monday.
The frenzy came even as analysts stressed that equities are experiencing a long overdue - and even healthy - correction.
Singapore's benchmark Straits Times Index (STI) closed yesterday 76.55 points, or 2.2 per cent, lower at 3,406.38. Yesterday's drop was its biggest one-day decline in two years, and helped to erase nearly all of the gains since the start of the year.
Still, the index remains up, albeit at 0.1 per cent, after rising by 18.13 per cent last year.
Investors were busy in the market, with more than 3.76 billion shares changing hands yesterday. This was up from 2.83 billion on Monday - when the index lost 1.33 per cent - and significantly higher than the daily average of 2.35 billion shares so far this year.
The pain was even more keenly felt elsewhere in the region. Hong Kong's Hang Seng plunged by 5.12 per cent and the Nikkei shed 4.73 per cent, while the Shanghai Composite lost 3.35 per cent and Sydney dropped by 3.2 per cent.
Markets have been in turmoil since last Friday, when Wall Street saw a mass sell-down after positive American wage data fuelled fears of higher inflation and the prospect of interest rates hikes.
But market watchers maintained that it was not time yet to panic. They cited strong fundamentals and noted that a sell-down had been imminent, given the past year's rally.
DBS Bank analysts, in an update yesterday, said the current turmoil "is similar to other mid-cycle corrections which have been seen in recent years". They pointed to the robust corporate earnings that are still coming out, as well as the lack of an ongoing recession.
"Tactically, we view this equity sell-down as necessary and overdue, after an unabated run throughout 2017," the DBS team wrote.
Mr James Bateman, Fidelity International's multi-asset chief investment officer, said in a statement that the recent market drama "is perhaps the greatest sign of real health in markets for a long time".
While the STI fell to an intra-day low of 3,353.96 after lunch yesterday - a drop of 3.7 per cent - it recovered some ground in the afternoon.
Meanwhile, US stocks were volatile when trading resumed last night, with the Dow Jones Industrial Average swinging between red and black in choppy trading.
As at 12.30am today (Singapore time) the Dow was down 150 points or 0.6 per cent.
Despite the sell-off some brave investors heeded the call to "buy on the dip", especially with the earnings season still under way.
Phillip Futures analyst Samuel Siew said that now might be a good time to scoop up shares in banks and telcos "because they are the main components of the index, with highest weightage, hence they are most impacted by the sell-down".
SEE TOP OF THE NEWS , BUSINESS
