Singapore: STI plunges 1.5% on heavy selling

THE bottom fell out of the local stock market on Tuesday, partly because of an impending change to the Straits Times Index's (STI) liquidity rules but mainly for reasons unknown.

The only hypothesis dealers could offer was that the 51.36-point or 1.5 per cent plunge suffered by the STI at 3,340.75 was ahead of a Tuesday collapse on Wall Street, given that movements here have often anticipated movements in the US market.

Whatever the case, the fall took the STI into negative territory for the year to date. It is now 25 points or 0.7 per cent down for 2015. Turnover amounted to a hefty 1.5 billion units worth S$1.74 billion and excluding warrants, there were 135 rises versus 340 falls. Volume done in the 30 STI components was 373 million units worth S$1.3 billion, which in dollar terms was 76 per cent of the whole market's business.

The Jardine stable was particularly badly hit following news on Friday that inclusion in the STI would be based on a higher liquidity requirement than before. Jardine Matheson, Jardine Strategic and Cycle & Carriage fell between 1.7 and 3.7 per cent on concerns that they will be dropped in the next index review. Their losses combined to knock about eight points off the index.

However, there were also large falls recorded by Singtel and the banks which could not be explained by the new liquidity rule. Singtel, for example, plunged S$0.15 or 3.6 per cent to S$3.98 on high volume of 56 million shares, a loss that cut 13 points off the STI.