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Singapore: Blue chips weaken but pennies remain the focus
HAVING already risen about 80 points in the previous four consecutive trading sessions, the Straits Times Index on Thursday fell back by 8.34 points to 3,531.61. Rotational punting of penny stocks in the meantime, continued in full force, with new names such as Ntegrator, Federal International and Otto Marine entering the actives list.
Turnover amounted to 2.6 billion worth S$1.5 billion and excluding warrants, there were 266 rises versus 203 falls throughout the market. Brokers said that the sudden jump in penny stocks came largely through proprietary traders looking to capitalise on improved sentiment generated by Hong Kong's recent surge.
"Syndicate action is very low so it is the prop desks which are responsible for much of the gains" said one broker. Others reported heightened interest from retail clients willing to jump on board anything that is moving; one said "when there's no activity or momentum, nobody wants to know but now that there's some action, the phones are ringing".
Yet others observed that stocks with very little fundamentals have doubled and tripled, thanks largely to their low absolute prices. "You recommend clients buy shares in good, profitable companies and they don't move; instead, what's moving are stocks that have nothing going for them other than that they are cheap in absolute price".
Among the index losers were Singtel and SGX, the latter dropping S$0.14 to S$8.45 after it replied to a query from the Monetary Authority of Singapore that contrary to market speculation, it is not negotiating a link with China.