Singapore shares close lower on worries of more US rate hikes than expected

THE US Federal Reserve lived up to expectations with a 25 basis point interest rate hike on Wednesday but the surprise came in its "dot plot" which suggested three rate hikes in 2017 instead of the two that the market had expected. As a result, Wall Street fell sharply and on Thursday, the Straits Times Index suffered its largest fall in about three weeks when it dropped 23.29 points to 2,930.77.

Liquidity has been a problem throughout the year and other than month-ending window-dressing when volume tended to shoot up past S$1.5 billion - on Nov 30 it hit S$2.6 billion - most days it comes in at around S$1 billion. On Thursday, 2.1 billion units worth S$1.1 billion were traded and excluding warrants there were 146 rises versus 315 falls.

All three banks closed weaker as did Singtel. The former have been pushed up over the past fortnight supposedly because higher interest rates suggest better margins; the latter fell after Australia's TPG Telecom was named the local market's fourth telco.

Also weak were Reits, which is to be expected given worries of higher interest rates.