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Singapore shares close lower as STI sinks for 9th straight day

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FOR the ninth straight session, the Straits Times Index (STI) on Thursday opened in the red, at its intraday low losing 24 points at 2,749. A firm opening for Europe and a 90-point rise in the Dow futures prompted a scramble that elevated the index to almost its opening level but it was unable to cross into the black, resulting in a net loss of 5.26 points at 2,767.81.

It was the ninth straight loss for the index, a losing streak that extends back to April 21 when it closed at 2,960.78. The loss since then has been 193 points or 6.5 per cent.

Turnover was a mediocre 986 million units worth S$1 billion and excluding warrants, there were 172 rises versus 177 falls.

All three banks ended sharply lower, although DBS traded ex-dividend. It paid a final dividend of S$0.30 and its shares closed S$0.34 down at S$15.01 on volume of 5.2 million.

Moody's Investors Service, in a report on Wednesday on local banks titled "Q1 2016 Results Underpin Negative Rating Outlook'', said it expects the asset quality of all three banks will continue to deteriorate because of slowing economic and trade growth in Asia, and stress on oil and gas borrowers in Singapore.

"For the three banks, we expect rising pressure on profitability, due to additional provisioning - particularly as the banks' specific provisions for oil and gas companies are low - because these loans are collateralized by specialized oil and gas equipment,'' said Moody's.

"We expect that oil and gas exposures will require additional provisioning, because the value of this collateral will fall further, as global oil prices remain low."