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Singapore shares close lower, STI surrenders 26-point intraday rise

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RISK on or risk off? Clearly, traders in the local market on Wednesday were unable to decide, as the Straits Times Index (STI) first shot up by 26 points to an intraday high of 2,815 before dropping alarmingly back to 2,786.13 at the close, a nett loss of 3.32 points for the day.

Wednesday's turnover of 791.3 million worth S$782 million was poor, and illustrated the caution with which all financial markets approached the UK's June 23 "Brexit" vote.

Some players however, were prepared to bank on Britain voting to stay in the eurozone, which probably explained the early rise in the STI, though this "risk on" phase could also have been because of receding worries of a US rate hike after US Federal Reserve chair Janet Yellen delivered a relatively dovish testimony to the US Senate on Tuesday.

Overall, the session offered only a handful of redeeming features, among them a modest rebound in the three banks that helped the STI post the gain that it did, continued punting of low-priced speculatives like LionGold, AddValue Technologies and Rowsley, and a S$0.055 slide in SingPost to S$1.505 on volume of 24.8 million after news that its chief operating officer has resigned.

In SingPost's case, Maybank Kim Eng noted that in less than a year, three senior executives have resigned, starting with the chief financial officer in July 2015 and the chief executive officer in December 2015.

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"Shortly after, the chairman and three more directors also stepped down. To make matters worse, competition in Singapore could intensify with rivals turning more aggressive and the government levelling the playing field," said the broker. "Maintain contrarian 'sell' and discounted cash-flow-based target price of S$1.29."

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