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Singapore stocks finish weaker after 6.4% plunge in Shanghai index


THE simple reason for the Straits Times Index's 16.56 points loss at 2,603.4 on Thursday could be that it was in response to a 6.4 per cent fall in the Shanghai Composite and weakness in the Dow futures which signalled a down session later for the Wall Street.

An equally possible explanation, however, was that the short-covering bounce of the past fortnight had run its course, opening the door to a fresh bout of selling as traders capitalised on weak sentiment and oil-related recession fears.

Whatever the explanation, the STI's loss was its second in succession, bringing its two-day fall to almost 70 points or 2.6 per cent.

One bright spot has been an uptick in volume, above the S$1 billion daily averages of the latter half of 2015. On Thursday, volume amounted to 1.1 billion units worth S$1.17 billion, of which S$798.2 million or 67 per cent was done in the 30 index members. Excluding warrants, there were 165 rises versus 204 falls.

Wire reports said the selloff in China was because of a rise in money market rates as well as concerns about the health of its economy.

All three banks fell, led by OCBC which lost S$0.18 or 2.2 per cent at S$7.84 with 7.3 million traded. Moody's Investors Service in its report on the local banks said asset quality of all three would continue to deteriorate because of slowing economic and trade growth in Asia, and increasing stress for oil and gas borrowers in Singapore.