by R SIVANITHY (16 Oct)
ST Index's 69-point fall on Wednesday amid credit-market uncertainties wipes out all of Tuesday's gains
Market players seemed inclined to sell into strength, given the many uncertainties surrounding the coordinated government bailout of US and European banks and the magnitude of the coming slowdown.
This conjecture was based on Tuesday's trading pattern when stocks slumped late in the session - a pattern that was repeated on Wall Street on Tuesday and again in the local market yesterday, when the Straits Times Index (STI) dropped 68.92 points or 3.2 per cent to 2,059.39.
The fall erased all of Tuesday's 51-point recovery and came after a 5 per cent loss in Hong Kong's Hang Seng Index, an 80-point drop in the December Dow Jones Industrial Average futures, and a soft opening across Europe late in the afternoon.
Turnover excluding foreign currency issues was a relatively thin 1.1 billion units worth $1.2 billion, much lower than Tuesday's $2 billion. The broad market, excluding warrants and STI stocks, managed just 97 rises versus 330 falls.
'Investors are still very jittery and prefer to sell into strength at every opportunity,' said a dealer. 'There is plenty of uncertainty about exactly how the government action will unfreeze credit markets, when this will happen and the impact of the coming recession.'
Leading the index losers were SingTel (probably because of Australian-dollar concerns), Keppel Corp (possibly because of worries over a slowing marine and offshore sector), and the banks.
SingTel's 19-cent plunge to $2.71 cut almost 20 points off the STI, while losses in the banks combined to account for a further 22 points. Sharp declines in commodity plays Wilmar and Olam sliced seven points off.
China shipyard Cosco Corp was in the spotlight for a second straight day, its 20.5 cent or 20.5 per cent collapse to 79.5 cents on volume of 86.3 million shares making it the second most actively traded counter.Tuesday's sell-off came after Credit Suisse rated the stock at 55 cents fair value.
Yesterday, DMG & Partners joined in with another 'sell' call along with an 86-cent target. Among other things, DMG said drastic changes to the macro-economic environment over the past two weeks have ended the multi-year boom cycle abruptly.
'The market for capital-intensive bulk carriers, already under close scrutiny from influx of new supply entering in 2009 and falling freight rates (a decline of 67 per cent from Sept 8), is now challenged with virtually no order delivery, delivery delays and cancellation possibilities,' DMG said.
RBS Greenwich Capital said: 'Some readers have asked why the money markets have not shown a greater improvement already. Traders suggest there are at least three reasons why the improvement is so restrained:
1) because the money market community is still unsure about how various government loan guarantees work and who exactly is covered;
2) because some money market funds have faced redemptions and are preserving cash; and
3) others are skittish having been caught out by the illiquidity of certain paper in the past and are likely to be even more discerning going forward.
'Nonetheless, there is some hope that once the government guarantees become better understood, spreads will start to tighten sharply, even allowing for the factors above.'
-Editorial Report by R SIVANITHY (16 Oct)
ST Index's 69-point fall on Wednesday amid credit-market uncertainties wipes out all of Tuesday's gains
Market players seemed inclined to sell into strength, given the many uncertainties surrounding the coordinated government bailout of US and European banks and the magnitude of the coming slowdown.
This conjecture was based on Tuesday's trading pattern when stocks slumped late in the session - a pattern that was repeated on Wall Street on Tuesday and again in the local market yesterday, when the Straits Times Index (STI) dropped 68.92 points or 3.2 per cent to 2,059.39.
The fall erased all of Tuesday's 51-point recovery and came after a 5 per cent loss in Hong Kong's Hang Seng Index, an 80-point drop in the December Dow Jones Industrial Average futures, and a soft opening across Europe late in the afternoon.
Turnover excluding foreign currency issues was a relatively thin 1.1 billion units worth $1.2 billion, much lower than Tuesday's $2 billion. The broad market, excluding warrants and STI stocks, managed just 97 rises versus 330 falls.
'Investors are still very jittery and prefer to sell into strength at every opportunity,' said a dealer. 'There is plenty of uncertainty about exactly how the government action will unfreeze credit markets, when this will happen and the impact of the coming recession.'
Leading the index losers were SingTel (probably because of Australian-dollar concerns), Keppel Corp (possibly because of worries over a slowing marine and offshore sector), and the banks.
SingTel's 19-cent plunge to $2.71 cut almost 20 points off the STI, while losses in the banks combined to account for a further 22 points. Sharp declines in commodity plays Wilmar and Olam sliced seven points off.
China shipyard Cosco Corp was in the spotlight for a second straight day, its 20.5 cent or 20.5 per cent collapse to 79.5 cents on volume of 86.3 million shares making it the second most actively traded counter.Tuesday's sell-off came after Credit Suisse rated the stock at 55 cents fair value.
Yesterday, DMG & Partners joined in with another 'sell' call along with an 86-cent target. Among other things, DMG said drastic changes to the macro-economic environment over the past two weeks have ended the multi-year boom cycle abruptly.
'The market for capital-intensive bulk carriers, already under close scrutiny from influx of new supply entering in 2009 and falling freight rates (a decline of 67 per cent from Sept 8), is now challenged with virtually no order delivery, delivery delays and cancellation possibilities,' DMG said.
RBS Greenwich Capital said: 'Some readers have asked why the money markets have not shown a greater improvement already. Traders suggest there are at least three reasons why the improvement is so restrained:
1) because the money market community is still unsure about how various government loan guarantees work and who exactly is covered;
2) because some money market funds have faced redemptions and are preserving cash; and
3) others are skittish having been caught out by the illiquidity of certain paper in the past and are likely to be even more discerning going forward.
'Nonetheless, there is some hope that once the government guarantees become better understood, spreads will start to tighten sharply, even allowing for the factors above.'
-Editorial Report by R SIVANITHY (16 Oct)
Posts
No comments:
Post a Comment