STI's plunge recalls 2008 financial crisis

PHOTO: The Straits Times

Local shares suffered their worst one-day plunge in seven years yesterday, as the panic on global markets sparked a massive sell-off.

The benchmark Straits Times Index plunged 4.3 per cent or 127.62 points to close at 2,843.39, with around 1.8 billion shares worth $1.77 billion changing hands.

It was downhill from the opening bell, with no let-up in the bloodbath until the market's close, with all 30 STI constituents ending in the red on a trading day reminiscent of the worst of the 2008 financial crisis.

The pain was centred on blue chips: DBS Bank dived 3.5 per cent or 64 cents to $17.65; OCBC Bank shed 4.4 per cent or 40 cents to $8.70; Singtel dropped 4.1 per cent or 16 cents to $3.78; Jardine Matheson was off 5 per cent or US$2.56 to US$48.57, and Hongkong Land slipped 6.9 per cent or 50 cents to $6.75.

Commodity firms Golden Agri-Resources and Noble Group were among the most actively traded. Golden Agri fell 6.5 per cent or two cents to 29 cents, with 55.9 million shares traded; while Noble plunged 7.9 per cent or 3.5 cents to 41 cents, with 43.9 million shares traded.

"There is a lot of fear in the markets. There is talk that the repeat of the China stock market decline may force more devaluation of the yuan, which could ignite a so-called currency war in the emerging markets," IG market strategist Bernard Aw said.

Phillip Futures investment analyst Howie Lee noted: "It may be an ominous foreboding of things to come. China's sudden step out to devalue its yuan brought this uncertainty sharply into view, which was not helped by the Fed's (United States Federal Reserve's) turn to bearishness in its latest minutes.

"While the index ended last week below the psychological 3,000 level, the steep fall in the US market on Friday precipitated the slump that we saw (yesterday)...We may be seeing more downward pressure in the coming sessions.

"Therefore, bargain hunters should beware. The 2,800 level will be the next key support to watch."

S-chip 8Telecom International managed to buck the trend.

It jumped 19 per cent or 12 cents to 75 cents after announcing it has entered into a conditional sale and purchase deal to sell its entire interest in two subsidiaries to Manfaith Investments for 420 million yuan (S$93 million).

Pacific Andes Resources and its subsidiary, China Fishery Group, continued to see selling pressure following their announcement last week that they were being investigated by the Monetary Authority of Singapore and Commercial Affairs Department for an offence under the Securities and Futures Act.

Pacific Andes sank 16.7 per cent or 0.5 cent to 2.5 cents, with 26 million shares traded.

It owns 70 per cent of fishmeal producer China Fishery, whose shares plunged 19.4 per cent or 1.4 cents to 5.8 cents, with 24.6 million shares traded.

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