Singapore shares lost steam yesterday as investors fled after the oil price dropped another notch.
The benchmark Brent crude fell below US$38 a barrel, triggering a sell-off that started overnight in the US where the Dow Jones Industrial Average pared 0.31 per cent.
Among the major regional markets, Shanghai was the only one to end in the black, up 1.45 per cent. Hong Kong dropped 1.57 per cent, Tokyo shed 2.42 per cent and Sydney closed down 1.42 per cent.
Singapore's benchmark Straits Times Index lost 34.43 points or 1.21 per cent to 2,800.92, its lowest in almost a month. Around 1.16 billion shares worth $1.01 billion changed hands across the market.
OCBC analyst Barnabas Gan told The Straits Times: "The oil price rally over the past month or so was mostly predicated on the Opec push for a production freeze, but people are spooked now as they see the rhetoric against it. The Doha talks are now expected to only maintain the status quo."
Major oil producers meet in Doha in mid-April to coordinate an output freeze, but Iran's outright refusal to curb its production has thrown a spanner in the works.
Mr Gan added: "In the second quarter, I see oil prices range- bound to reach at best US$40 per barrel by the end of June."
As usual, the oil scare sent Singapore's offshore and marine stocks tumbling. Keppel Corp dipped 15 cents or 2.63 per cent to $5.55 and Sembcorp Marine lost 6.5 cents or 4.05 per cent to $1.54.
Smaller plays also suffered. Ezion Holdings slipped two cents or 3.7 per cent to 52 cents and Nam Cheong shed 0.6 cent or 5.88 per cent to 9.6 cents. Ezra Holdings dropped half a cent or 5.1 per cent to 9.3 cents. It was also yesterday's top active counter, with 80.4 million shares transacted.
The slump left 25 of the 30 STI constituent stocks lower. Besides the oil-related slump, Singtel led the losers, falling six cents or 1.58 per cent to $3.74 as investors took profit after Monday's rise.
All three banks took a beating: DBS pared 12 cents or 0.79 per cent to $15.05. United Overseas Bank lost 25 cents or 1.33 per cent to $18.58, and OCBC dropped 11 cents or 1.24 per cent to $8.73.
Only three STI stocks rose: Thai Beverage added half a cent or 0.69 per cent to 72.5 cents; Sats gained two cents or 0.5 per cent to $4.05; StarHub put on one cent or 0.3 per cent to $3.31.
Outside the STI, SPH Real Estate Investment Trust closed down 0.5 cent or 0.52 per cent at 96.5 cents, a day after announcing a distribution per unit of 1.4 cents - unchanged from the same period last year - for the quarter to Feb 29.
CIMB gave SPH Reit a hold call with a target of $1.05. "Excluding one-offs, there were higher cost savings year-on-year in the quarter, thanks to... lower tariff rates, more efficient energy consumption and lower marketing expenses."