Regional MARKET Slump

March 1, 2008

Regional bourses slump on grim market predictions

WHEN market sentiment turns bearish, frank prognoses from leading market players can hurt a lot. Regional bourses headed south again yesterday after a warning by United States central bank chairman Ben Bernanke that some smallish US banks might fail.

That was bad enough. But in Singapore, traders were also rattled by a series of frank admissions by company chiefs regarding the cloudy outlook for their respective business sectors.

Bank and property counters dived as investors reacted to billionaire Kwek Leng Beng's remarks that he was prepared to hold off the launch of new projects by City Developments (CDL) until next year, if the lacklustre property market sours further.

And plantation stocks suffered a selldown for a second day, following remarks by another billionaire, Mr Kuok Khoon Hong, who runs Wilmar International, that biodiesel would have a lousy year, as palm oil prices soar to record-high levels.

'When billionaires speak, people sit up and listen. But their comments may be costly for investors,' said a dealer.

The Straits Times Index suffered its steepest fall in over a week, ending 47.7 points down at 3,026.45, after hitting a low of 3,003.07 in late trading.

CDL lost $472 million in market value as its counter fell 52 cents to $11.96, while Wilmar's market capitalisation came down by $766 million, after its shares fell 12 cents to $4.39.

A lacklustre residential market would have a far-reaching impact on many business sectors in Singapore. Financial stocks such as United Overseas Bank fell 32 cents to $18.02, while DBS Group Holdings lost 18 cents to $17.34, because of concerns regarding a possible drop in demand for mortgages.

Construction counter CSC Holdings slipped 0.5 cent to 30 cents on a possible drop in orders from developers. Elsewhere, the fall in trading activities took its toll on the Singapore Exchange, which fell 23 cents to a six- month low of $8.39, as a modest 1.45 billion shares worth $2.02 billion changed hands yesterday.

On the broader market, short-covering enabled Synear Food Holdings to regain 3.5 cents to 68 cents on a heavy volume of 43.9 million shares, after it reached a record intra-day low of 61.5 cents in the morning.

Reflecting the grim sentiment, the FTSE ST Mid Cap Index fell 5.25 points to 793.41 and the FTSE ST Small Cap Index was down 1.72 points at 695.25.

Source: The Straits Times