Local shares beat a retreat yesterday as investors opted to take profit after a bank-led rally drove the index higher in recent weeks.
The benchmark Straits Times Index (STI) slid 36.5 points, or 1.12 per cent, to 3,227.71. A total of 1.51 billion shares worth $1.32 billion were traded across the bourse.
"What we've seen in the STI over the last few weeks was not a broad-based rally, but one that was driven by heavyweights such as the banks and the Jardine stocks," said Mr Kelvin Wong, chief technical strategist for Asia at City Index. "And if you zero in on the banks, they have been overbought, so we are definitely seeing some pullback as traders take profit off the table."
Mr Wong added that the laggards in the index will need to catch up for the local market to see a more pronounced and sustainable rally.
The three local banks, which have had a stellar run in recent weeks, were a big drag on the STI yesterday. United Overseas Bank sank 1.7 per cent, or 41 cents, to $23.25; while OCBC Bank lost 0.8 per cent, or eight cents, to $10.54. DBS Group Holdings shed 0.6 per cent, or 12 cents, to $20.65.
A number of property counters fell as well - likely as traders took profit on encouraging data that showed developers here sold 1,780 private homes in March, the highest since June 2013.
CapitaLand dropped 3 per cent, or 11 cents, to $3.50, for example.
DBS Equity Research noted in a report that positive sentiment has returned to the property market as seen in the record sales in the last two months, while developers are bringing forward launches to catch the "euphoric" wave.
"With strong sales volume and dwindling residential supply, the Government may increase land supply soon to prevent potential overheating. We continue to track sales volume and believe sustainable strong volumes are a prelude to a recovery in property prices," it said.
DBS added that its top picks are UOL Group and Frasers Centrepoint, as they are poised to be beneficiaries of the potential relaxation of property measures. UOL slipped 1.3 per cent, or nine cents, to $7, and Frasers Centrepoint eased 0.8 per cent, or 1.5 cent, to $1.855.
Singapore Post continued to slide on analysts' downgrades, dropping 2.6 per cent, or 3.5 cents, to $1.305. The group said last Friday that it is reviewing its acquisition of United States e-commerce business TradeGlobal, for which it has taken an impairment charge of $185 million.
Disa was again the most traded counter, dropping 3.4 per cent, or 0.1 cent, to 2.8 cents on 137 million shares done. Other actives included Addvalue Technologies, down 8.1 per cent, or half a cent, to 5.7 cents; and Noble Group, which soared 11.9 per cent, or seven cents, to 66 cents.
Elsewhere in Asia, Shanghai rose 0.74 per cent, Tokyo gained 0.25 per cent and Sydney climbed 0.21 per cent. Hong Kong eased slightly by 0.14 per cent.