THE local stock market continued to be plagued by weak sentiment on Wednesday as the Straits Times Index recorded its third straight fall, albeit in slightly improved volume.
Softness in Hong Kong because of a sharp fall in the Chinese yuan was blamed for the weakness here and possibly in the futures market where the Dow futures suffered a 100-point loss. The Hang Seng ended one per cent down while Europe opened in the red across all markets.
Regional bourses were rattled in the morning when the People's Bank of China (PBOC) unexpectedly cut its daily fixing for the yuan to the lowest level since April 2011, weaker than the yuan's last onshore closing level. The currency fell 0.6 per cent in Hong Kong's freely traded market as well as in Shanghai, with both exchange rates dropping to their weakest levels since at least March 2011.
Here, the STI's 29.96 points or 1.06 per cent loss at 2,804.27 brought its fall for the year to 78 points or 2.7 per cent, this after it dropped 14.3 per cent in 2015. Turnover was 1.2 billion units worth S$1 billion compared to S$852 million on Monday and S$895 million on Tuesday.
"2016 is proving to be a continuation of 2015 with no change," said a dealer, by now punch-drunk from the hits the local market has taken for many months now.
Bloomberg Business quoted Nizam Idris, head of foreign exchange and fixed-income strategy at Macquarie Bank in Singapore as saying the market will be confused by what Beijing is trying to signal with the recent market intervention and (Wednesday's) yuan fixing.