Bulls And Bears

STI sinks deeper into the red to 20-month low

Global share rout sends STI tumbling into sixth straight day of losses

Local shares crashed to a 20-month low yesterday as investors rushed for the exits amid a global share rout.

The bloodletting sent the Straits Times Index (STI) down 84 points or 2.69 per cent to 3,047.39 - its sixth straight day of losses.

The key benchmark has lost 220 points or 6.7 per cent since Thursday last week.

Investors needed no persuading to bail out yesterday, following an overnight plunge on Wall Street that only served to highlight long-simmering risks.

Elsewhere in the region, the losses were more accentuated with key benchmarks in Japan, Hong Kong and South Korea falling between 3.5 per cent and 4.4 per cent, with China's Shanghai Composite the hardest hit with a 5.2 per cent fall.

Market watchers were at a loss to pinpoint the chief culprits for the Wall Street losses, given the absence of any key macro data or single negative headline. They instead turned to the usual suspects - trade tensions and rising interest rates amid a looming US midterm election.

"What exactly is spooking the equity markets? It's difficult to pinpoint it to simply weak market sentiments or animal spirits?" said OCBC Treasury Research.

OCBC said the "rapid unravelling" this week could have been triggered by some market concerns that the upcoming US earnings season may disappoint due to unrealistic expectations and the fact that the market was overdue for a correction. "However, the ferocity of the corrective move suggests that something beyond fragile sentiments are at work," it added.

DBS Research said it expects fundamentals such as macro and corporate earnings growth to return and stabilise the markets, noting: "We've seen this before", referring to the sell-off early this year "before calm and rationality took over".

Turnover here was 2.1 billion shares worth $1.67 billion with 429 losers to just 72 gainers. All of STI's 30 component stocks ended in the red bar one that closed unchanged.

The banks saw sharp losses: DBS was down 2.6 per cent to $24.31, OCBC lost 2.5 per cent to $10.68 and UOB slid 2.5 per cent to $25.23.

The Jardine counters were badly hit with Jardine Matheson Holdings down 3.7 per cent while Jardine Strategic Holdings retreated 4.4 per cent and Jardine Cycle & Carriage lost 2.8 per cent.

Analysts say the October pain could last awhile longer. "The spillover effect could bring the market lower for the near term, but we expect the quantum of decline to moderate," said OCBC yesterday.

A version of this article appeared in the print edition of The Straits Times on October 12, 2018, with the headline 'STI sinks deeper into the red to 20-month low'. Print Edition | Subscribe