Blue chips rule as Draghi's words lift markets

THE past five days have been all about blue chips and little else with trading in the Straits Times Index's 30 members providing at least two-thirds of dollar volume every day.

Underpinning Friday's 30.35 points or one per cent rise to 3,068.46, which brought the week's gain for the index to 38 points or 1.25 per cent, was a variation of the "bad news is good news" maxim - hopes of more stimulus from the European Central Bank following comments by its president, Mario Draghi, which propelled Western markets including Wall Street on Thursday.

The STI's performance gives the impression of a robust, healthy market when this is not really the case, not if volume is factored into the equation. On Friday, business done was 1.5 billion units worth S$1.03 billion of which S$693 million or 67 per cent came from the STI; stripping out the index's turnover leaves 1.2 billion units worth S$337 million that was generated by the 770 plus other stocks - a weak showing by any standards.