Another weak day for local stocks

IT'S difficult not to agree with trading representatives who claim that present market conditions are the worst in at least 20 years, not when turnover on Wednesday was a paltry 1.3 billion units worth S$734 million, the Straits Times Index (STI) dropped 25.48 points to 2,828.57, and a large institution like HSBC Global Research has announced earlier in the week it has stopped covering Keppel Corp, a bastion of the local market.

The average value per unit traded on Wednesday worked out to S$0.56, clearly pointing to where the market's trading energies were directed. Those who view the glass as being half-full might view the lopsided interest in penny stocks as presenting opportunities for investors to discover undervalued gems; those who see the glass as half-empty - and these would count among the vast majority - would say there is something fundamentally wrong if the market is led by poor quality issues.

As for Keppel, brokers pointed to a Tuesday flash note from HSBC that it is stopping coverage because of a re-allocation of resources. "Our final target price is S$5.21 and final rating is Hold," said HSBC. "Yet another indication of how poor the interest is in local stocks," said a dealer. On Wednesday, Keppel lost S$0.07 at S$5.27 on volume of 2.96 million.