Asian stocks drop, STI falls 39 points as fragile sentiments prevail

Local stocks slumped for the second straight day, with 1.75 billion shares worth S$1.03 billion changing hands on the market.
Local stocks slumped for the second straight day, with 1.75 billion shares worth S$1.03 billion changing hands on the market.PHOTO: REUTERS

SINGAPORE - The local market was down for the second straight day, joining the region wide decline on Tuesday that reflected the still fragile sentiments among investors.

The benchmark Straits Times Index (STI) pared 38.67 points or 1.32 per cent to 2882.77. A total of 1.75 billion shares worth S$1.03 billion changed hands on the market, in a torrid session that was further worsened by a late hour selldown.

The drop suggested that the rebound last week might be short-lived, as STI continued to struggle following the 16 per cent fall between July 20 and August 24, when fears of China's slowdown and the shock of yuan's devaluation caused a global rout.

CMC Markets analyst Nicholas Teo voiced a cautionary note: "My advice to clients is that this is a rebound not for you to buy in, but to trim position on. We are seeing what could be the new market norm, a landscape with many moving parts including the rate hikes by the Federal Reserve.

"The weak China figures, Bangkok's bombing and the protests in Kuala Lumpur are not giving reasons for funds to stay in Asia either."

At Wall Street, the Dow Jones Industrial Average was down 0.69 per cent overnight, as investors were jittery over the speech by Fed vice chairman Stanley Fischer who gave further signs that the Fed will raise rates in September.

In Asia, sentiments were further doused on Tuesday after fresh official data showed that China's manufacturing activities in August fell the most in three years.

Shanghai was down 1.23 per cent as a result, while Hong Kong lost 2.24 per cent and Kuala Lumpur pared 0.22 per cent. But Tokyo fell the most in the region, down 3.84 per cent.

Against the grim backdrop, most of the blue chips in Singapore were hammered - of STI's 30 component stocks, 27 dropped and none gained.

Commodity plays, which were lifted on Monday by a recent improvement in oil prices, were back in the doldrums. Noble Group was the top losing counter of the bunch, closing 2.5 cents or 4.59 per cent down to 52 cents, while Olam International ended 8.5 cents or 4.11 per cent lower at S$1.985. Golden Agri-Resources was also down, dropping one cent or 3.17 per cent to 30.5 cents.