Investors continued to dump bank and energy stocks yesterday in the wake of Swiber Holdings' shock bid for liquidation. The news that it placed itself under judicial management came after the market closed.
Bearish sentiment over who the next victim in the oil and gas sector might be, coupled with a spike in short-selling activity, sent the bourse skidding 1.71 per cent.
DBS Group tanked 2.96 per cent, or 47 cents, to $15.41; OCBC Bank sank 2.3 per cent, or 20 cents, to $8.60; and United Overseas Bank (UOB) dropped 2.7 per cent, or 50 cents, to $18.20.
Swiber's woes have spread to offshore marine firm Pacific Radiance, which lost 4.5 per cent to close at 21 cents yesterday.
Pacific Radiance said it expects to make a provision of about US$10.1 million (S$13.6 million) for debts that may not be recovered. This relates to services rendered by subsidiaries to Swiber's related entities.
It added that it had previously served letters of demand to Swiber's related entities for recovery of these receivables, and "will continue to pursue all legal avenues of recovery". These provisions are expected to "negatively impact its net tangible assets and earnings per share for the full year ending Dec 31".
Other stocks in the industry were targeted by short-sellers. Ezra Holdings, which offers subsea services to the industry, saw its shares drop 3.8 per cent, or 0.2 cent, to five cents. Ezion Holdings, which provides rigs services, shed 4.8 per cent, or 1.5 cents, to 30 cents.
But Vallianz bucked the downtrend, rebounding 4.8 per cent, up 0.1 cent, to 2.2 cents yesterday after a sell-off on Thursday following the Swiber move. Swiber is Vallianz's controlling shareholder and Swiber's founder and executive chairman Raymond Kim Goh resigned abruptly on Wednesday from the chairmanship of Vallianz.
A major shareholder of Vallianz, Rawabi Holding Company, said yesterday it was confident of the group's business prospects.
The fallout continued in other areas as well, with CMC Markets Singapore analyst Margaret Yang Yan noting that Swiber is "a big shock" to equity and bond markets.
Not helping is news that DBS has a total exposure of about $700 million to Swiber, and expects only half of this to be recovered as the exposure is only partially secured.
"There are also a lot of worries over UOB's and OCBC's general exposure to the oil and gas sector, plus oil prices fell to three-month lows of around US$41," Ms Yang said.
Swiber's predicament comes amid a rout in oil prices, UBS said.
Based on their latest disclosure, the oil and gas and commodity sectors account for 12 per cent of OCBC's total loans, and 7.5 per cent of UOB's total loans.
There will be greater clarity on DBS' exposure when it announces its results on Aug 8, UBS said. Remisier Desmond Leong said funds with exposure to the oil and gas sector may reduce these positions.