STI falls below 2,800, lowest since June 2012

THE Straits Times Index (STI) on Monday kicked off the week on a distinctly poor note, dropping 40.72 points or 1.4 per cent to 2,791.92, its lowest close since June 2012.

The slide was led by falls in Singtel, the banks and several other index heavyweights, prompting speculation that it was selling by large funds ahead of the end of the third quarter which ends on Wednesday.

Turnover done in index components amounted to S$703.2 million, which in dollar terms was 73 per cent of the entire market's business of 950 million units worth S$965.3 million. With the index displaying such weakness, it came as no surprise that the advance-decline score was 108-295, excluding warrants.

Singtel's S$0.12 or 3.3 per cent fall to S$3.52 came with 63.2 million done and cut 11 points off the STI.

Among the banks, DBS ended S$0.19 weaker at S$16.58 on volume of 4 million. Macquarie Warrants (MW) in its daily newsletter said the stock is Macquarie Equities Research's (MER's) top sector pick with an "outperform" and S$20 target.

"MER believes the key reasons to buy DBS are (i) good earnings momentum in a relative context, (ii) relative beneficiary of higher rates given the strong Singapore dollar liquidity position, (iii) potential to lift dividend payout ratios, and (iv) potential to shift the strategic focus towards cost efficiency if growth opportunities continue to disappear," said MW.

Elsewhere within the index, Genting Singapore ended S$0.015 down at S$0.0715 on volume of 17.7 million. UOB Kay Hian in a Sept 25 update said it recently hosted a luncheon with Genting and reaffirmed its view that at the prevailing price, the market has factored in the lack of clarity in the company's capital management practice.