China weakness continues to weigh on STI

CONTINUED weakness in China and Hong Kong stocks meant the Straits Times Index (STI) kicked off the week with a 9.71 points or 0.30 per cent loss to 3,192.79 on Monday. This weakness was also evident in penny stocks where the rally of the past three weeks exhibited clear signs of serious strain - at the peak of the penny fever, average value per unit traded was about S$0.40; on Monday, a volume of 1.5 billion units worth S$1.14 billion gave an average value of S$0.76.

An advance-decline score of 138-350, excluding warrants, provided further grounds for thinking that the penny fever may be declining.

Brokers, however, were not unduly surprised at this since most of the interest in penny stocks had been generated by dealers and house traders to begin with. Many had also noted that without meaningful retail investor participation, the rally was always likely to be shortlived.