Local shares tumbled on weak results from OCBC Bank and fears that the stimulus package from the Bank of Japan may disappoint.
The Straits Times Index closed 0.78 per cent or 22.87 points down at 2,918.62, hit by DBS Group, which slipped 2.3 per cent or 38 cents to $15.88.
The bank's share price was down over its exposure to offshore marine group Swiber Holdings, which shocked the market when it announced it would make an application to wind up the company and put it into provisional liquidation. This came after it received several letters of demand totalling US$25.9 million (S$35 million), including a statutory demand of US$248,500.
The bourse was also weighed down by UOB, which dipped 1.3 per cent or 24 cents to $18.70, and OCBC, down 0.6 per cent or five cents to $8.80.
Dealers said investors may be disappointed that both banks have recorded an increase in non-performing loans in Singapore and Malaysia and declines in net interest margins.
"There's selling across the board because of OCBC's surprising 15 per cent drop in net profit. There are also fears that the BOJ stimulus may not be large enough to appease the market," remisier Alvin Yong said.
Singtel fell 0.5 per cent or two cents to $4.29, while Keppel Corp shed 1.7 per cent or nine cents to $5.32. OCBC Investment Research, which had a hold call on UOB, said it is reviewing its fair value rating.
UOB KayHian maintained a buy on DBS, saying the bank is expected to have "done well to maintain net interest margins, generated year-on-year growth in fees, and preserved stability in asset quality".
Meanwhile, Vallianz Holdings tanked nearly 42 per cent or 1.5 cents to 2.1 cents, following the winding up move by its controlling shareholder Swiber.
About 307.6 million shares changed hands, making it the most hotly traded stock and prompting a query about its unusual price and volume movement from the Singapore Exchange.
Oil and gas counters were among the most actively traded, with Ezra Holdings down 7.1 per cent or 0.4 cent to 5.2 cents, with 72.3 million shares traded. Rex International slipped 7.9 per cent or 0.5 cent to 5.8 cents on trading of 44.2 million shares.
GKE Corp requested a trading halt pending an announcement.
New listing Wong Fong Industries made a strong debut at 31 cents, above its 23 cents offering with about 18.7 million shares changing hands.
SGX dipped 1.03 per cent or eight cents to $7.66 after fourth-quarter earnings came in below forecasts. This was due largely to an impairment charge of $6 million for its investment in the Bombay Stock Exchange, OCBC Investment Research said.
"Excluding this, net earnings would have been in line with expectations," OCBC said.