Selloff in banks sends STI down 1.3%

IT was the banks that supported the Straits Times Index for most of 2014 and so it shouldn't come as any surprise that it was a bank selloff that pulled the index 42.31 points or 1.3 per cent lower on Monday to 3,328.28, the first proper trading day of 2015 after last week's holidays. Turnover was a poor 1.26 billion units worth S$845 million.

Business done in the three banks was worth S$168 million or 20 per cent of the entire market's turnover. Excluding warrants, there were 165 rises versus 257 falls.

On the face of it, investors were reacting to the news of uncertain GDP growth for 2015 by selling the banks but a more likely explanation was that hedge funds which pushed the sector up last month to window-dress their performance were cashing out, possibly expecting a Wall Street selloff on Monday. Europe's problems, particularly with Greek elections on Jan 25, were said to have also played a part.