Week's STI rise belies poor trading conditions

IT has been an odd week for the local stock market with the Straits Times Index's (STI) 61 point or 2 per cent rise over the five days to 3,099.93 suggesting strong demand for stocks, which is not really the case. The reality is that volume has been poor for several months now, dealers spend a large portion of each day either trading on their own or playing computer games and penny stock turnover has been declining.

In yesterday's session when the STI added 13.29 points, volume was two billion units worth $1.1 billion, of which $640 million or 58 per cent was done in the 30 index stocks.

Underpinning the index's recovery over the past fortnight is a rebound on Wall Street, a bounce that has come despite weak employment and housing numbers and has probably been driven by a belief that interest rates will remain depressed for at least another a year.