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Singapore: STI continues slide on China jitters
THE Singapore market continued to slide after opening 0.45 per cent lower on Tuesday morning, as China jitters unsettled traders and investors.
The benchmark Straits Times Index (STI) had lost 0.88 per cent of its value, or 29.15 points, to stand at 3,284.27 at 10.28am.
Equity markets in the region are also in the red. On Tuesday morning, Hong Kong stocks opened 0.34 per cent lower at 24,269.90, while Tokyo shares eased 0.79 per cent to 20,188.57. The Shanghai stock index dipped further at the opening, falling 4.09 per cent to 3,573.14, despite a renewed government vow to support the market.
The 8.5 per cent plunge in the Shanghai Composite Index on Monday was its largest daily percentage loss in eight years, and second largest on record. This had probably been triggered by a combination of factors, analysts said, including dismal economic data and the fear that some market stabilisation measures would be taken away prematurely due to pressure from the International Monetary Fund.
In such times, market movements will tend to be exaggerated and overshoot on either side, said CMC market strategist Nicholas Teo.
"For levels to 'revert to mean' again, we firstly need to see an extended degree of flat lining for the markets," he wrote in a note. "Meaning to say, most stakeholders there (with the exception of those exposed at the very top of the market) would welcome a period of stability - with minimal intraday or daily swings. This would allow back offices to catch-up with the outstanding margin situation and to begin a process of consolidation of accounts."
The Chinese government has in the past few months moved to stabilise the volatile Shanghai market. It has suspended initial public offerings and imposed restrictions on short-selling, while local brokers and mutual funds have also stumped up money to buy stocks.
"My best guess is they may continue doing all of the above, including increasing the magnitude, if necessary," said IG market strategist Bernard Aw. "Clearly, they recognised the arguable negative impact of managing the stock market from supply-side measures, therefore the knee-jerk reaction was to step up demand-side actions."
The 3,300 mark will be a key support level for the STI, he added.