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Market slumps on afternoon sell-off

This article is more than 12 months old

Straits Times Index down 1.5% to end July at 3,300, with local banks leading the losses

Ahead of the US Federal Reserve's July rate decision, investors in the local market exited positions in a session that saw the Straits Times Index (STI) slide 49.79 points or 1.5 per cent to end July at 3,300.75.

The STI dropped 1 per cent during the first half of the afternoon session, as did MSCI Singapore futures during that period. Dealers mostly attributed the drops to investors exiting positions to close the month out.

Singapore shares were also impacted by weak trade in Hong Kong and US President Donald Trump's dour comments on China prior to the conclusion of trade talks in Shanghai.

While the bar was set pretty low for progress between the two countries, there was slight disappointment at the conclusion of the meeting.

Mr Stephen Innes, Vanguard Markets' managing partner, told The Business Times: "The fact that they couldn't agree on the G-20's soft-peddled concessions is a worrying sign, in my view.

"But also a continuation of the drift that in light of Trump's aggressively tinged trade remarks, that we are no closer to an agreement but in fact might be further apart."

July started out quite differently from how it has ended for Singapore equities.

The month started with optimism emanating from pledges by the US and China to resume trade talks following the G-20 summit and expectations of accommodative central bank policies.

As the month wore on, Singapore Exchange market strategist Geoff Howie noted that US dollar strength capped gains in the region and as "expectations for the Fed's expected rate cut set in and earnings commenced, institutions took to booking profit, especially among real estate investment trust plays".

Over July, the blue chip index dipped 0.6 per cent.

During yesterday's session in Singapore, trading volume was 1.15 billion securities, 96 per cent of the daily average in the first six months of 2019. Total turnover came to $1.73 billion, 63 per cent over the January-to-June daily average.

Across the broader market, decliners beat advancers 294 to 150. Meanwhile, the blue-chip index had 28 of its 30 components closing in the red.

Genting Singapore, which dropped 0.5 cent or 0.5 per cent to $0.92, was the benchmark index's most traded stock with 42.3 million shares changing hands. The casino operator will be reporting results for the second quarter ended June 30 after market closes on Friday.

The local banks all ended lower. DBS Group Holdings was $0.08 or 0.3 per cent lower at $26.41, OCBC Bank fell $0.17 or 1.4 per cent to $11.54 and United Overseas Bank closed at $26.40, down $0.40 or 1.5 per cent.

Remisier Ernest Lim said: "Some blue chips such as the banks have risen quite a bit in anticipation of good results. As such, it is quite normal for investors to take profit, especially at month's end."

Among key second-line performers, Sheng Siong shares continued to garner the attention of investors after posting a better-than-expected Q2 performance.

The supermarket operator, which plans to pay out a higher dividend for the April-to-June period, bucked the local trend to finish $0.01 or 0.9 per cent up at $1.16.

Research houses have mostly maintained or upgraded their recommendation on the stock to "buy" while raising their target price on the earnings surprise.

Elsewhere in the Asia-Pacific, shares in Australia, China, Hong Kong, Japan, Malaysia and South Korea closed lower.

Hong Kong's market had to close early for the first time in nearly two years because of an approaching storm. The Hang Seng lost 1.3 per cent in the shortened session.

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