"SELL in May and go away," that's what the old adage recommends. It's now ten days and counting - that's how long the Straits Times Index has been falling, during which it has lost 230 points or 7.8 per cent. This week's fall was 108 points or 3.8 per cent, including Friday's 37.01 points slide to 2,730.80.
Trading has been getting progressively narrower as the days pass, with the bulk of activity focused in the 30 STI stocks. On Friday, the STI's turnover was S$854 million versus the whole market's 967.3 million units worth S$1.1 billion, which in dollar terms was 78 per cent. The advance-decline score was 136-270 excluding warrants, which means some 400 counters were either not traded or closed unchanged.
The weakness was not confined to stocks here as most global equity markets have been hit to varying degrees - Hong Kong's Hang Seng Index, for example, this week dropped almost 1,000 points or 4.5 per cent to 20,109.
There is no real agreement among observers as to why markets have been in free fall for the past fortnight - reports on Thursday that investors were cautious ahead of the release of the US payroll numbers on Friday and therefore sold were perhaps born of a need to find a reason, rather than admit ignorance.
A better explanation is that now that the short-covering bounce triggered by oil's recovery has run its course, funds have switched back to a shorting stance because of economic growth and earnings concerns, which thus far has yielded admirable results.