STI dips as traders turn to China banks

DESPITE a jump in the Dow futures, the Straits Times Index (STI) was weak throughout Tuesday's session, most likely due to traders switching out of Singapore banks and into China bank shares trading in Hong Kong, or H-shares as they are known, following news over the weekend that the People's Bank of China (PBOC) has cut its reserve ratio requirements for banks that provide loans to small businesses.

This possibility arose because falls in the three banks here were largely responsible for the STI's 16.02-point loss to 3,246.08 and because of the Hang Seng Index's 618.91-point or 2.3 per cent jump to 28,173.21, about 285 points or almost half came from rises in China Construction Bank, Industrial and Commercial Bank of China, and Bank of China.

China Construction Bank, in particular, jumped HK$0.38 or 5.9 per cent to HK$6.86, adding 130 points to the Hang Seng.