Oil linked shares Rise but Overall Market Weaker

Nov 8, 2007

TAKING STOCK: Oil-linked shares rise but overall market weaker

LOCAL stocks linked to the offshore oil exploration industry shot up yesterday, as crude oil prices moved in on the US$100 a barrel level for the first time in history. However, investors' hopes of fast riches from this week's listing of Alibaba.com faded as covered warrants issued in Singapore tumbled sharply after the mother share fell in Hong Kong.

Blue chips had a mixed day ahead of the Deepavali holiday, as bulls grappled with bears for supremacy. But by the close, the bears had clearly emerged on top, as the benchmark Straits Times Index ended 10.09 points lower at 3,673.01, despite gaining 36 points in the morning.

Singapore's weakness was, however, not reflected in some other major regional bourses. Hong Kong's Hang Seng Index ended 0.92 per cent higher, while the Shanghai market was also stronger.

Dealers said investors were spooked in late trading by a sell-off in DBS Group Holdings, brought on by fears that it might end up in a bidding war with Dutch-based ING Group to raise its stake in Thailand's TMB Bank.

This followed talk that DBS was teaming up with Deutsche Bank to lift its stake in the money-losing bank from 16.1 per cent to at least 25.2 per cent. DBS, the top loser, dropped 50 cents to $21 on a hefty volume of 11.11 million shares.

Still, the STI's weakness was cushioned by gains made by stocks such as SingTel, up four cents at $3.96, after it posted sterling second-quarter results. And interest in oil-linked shares was ignited by soaring crude oil prices. Keppel Corp gained 30 cents to $14.20, while SembCorp Marine rose four cents to $4.54. On the broader market, the dramatic collapse in the various Alibaba.com warrants issued by foreign banks kept dealers glued to their screens.

'It seems like 'close sesame' for traders still trapped with the warrants,' said a dealer.

As the mother share dropped an eye-popping HK$6.90, or 17.5 per cent, to HK$32.60 in Hong Kong, all the top four warrant losers were issued on Alibaba.com. However, the frenzied trading enabled overall market volume to stay at a hefty 2.17 billion shares worth $2.61 billion. On the scoreboard, there were 295 gainers against 470 losers.

Source: The Straits Times