Singapore shares slide on credit rating downgrade, STI closes 32 points down

The Straits Times Index slipped 1.11 per cent or 31.88 points to 2,840.90.
The Straits Times Index slipped 1.11 per cent or 31.88 points to 2,840.90. PHOTO: ST FILE

SINGAPORE - Profit-taking and a credit rating downgrade of four local banks sent Singapore shares sliding back into negative territory.

The Straits Times Index slipped 1.11 per cent or 31.88 points to 2,840.90, dragged down by Singtel and banking counters OCBC, UOB and DBS. The telco fell 0.8 per cent or 3 cents to S$3.82, OCBC dropped 1.2 per cent or 11 cents to S$8.84, UOB slid 0.9 per cent or 18 cents to S$18.87, and DBS shed 0.7 per cent or 11 cents to S$15.38.

"The profit-takers were out early in the morning, but that accelerated after news of the Moody's downgrade of Singapore banks' credit rating hit the market," remisier Alvin Yong said.

Moody's Investors Service on Thursday (March 31) lowered the credit rating outlook of DBS Bank, DBS Group Holdings, OCBC and UOB to negative from stable, citing concerns over the banks' asset quality and profitability.

DBS Bank, OCBC, and UOB are rated at Aa1, the second-highest long-term rating. DBS Group Holdings is rated at Aa2, a notch below the other banks.

But it noted that the Singaporean banks have very strong buffers in terms of capital, loan loss provisions and pre-provision income.

Meanwhile, penny plays were hotly traded, with several companies triggering queries from the Singapore Exchange for unusual price or volume movements in their stock.

MFS Technology, whose stock plummeted 77 per cent or 8.6 cents to 2.5 cents, with nearly 101 million shares traded, said it could not explain the unusual volume movement in its stock.

But the technology firm said it had announced that the books closure date of a capital reduction exercise is set for April 4. The exercise involves a cash distribution of 10.733 cents in cash for each share in the capital of the company to shareholders.

"Yesterday was the ex-entitlement date, which means entitled shareholders should get 10.733 cents for each share held as at the books closure date," Mr Yong said.

When queried, logistics provider CWT, which gained 1 per cent or 2 cents to $1.96, said it could not explain the movement in its stock.

But it said it had, on Aug 3, 2015, announced a strategic review of its business and assets by controlling shareholder C&P Holding, which may or may not lead to a transaction involving the company.