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THE local market ended a four-day rally yesterday as investors took profit after the recent market frenzy, in a fall
mirrored across Asia as regional bourses slipped from their 10-month peaks.
The morning sell-off was mild, but sentiment soured after China markets took a sudden dive in the afternoon on concerns that government efforts to control huge amounts of bank lending could suck out some of the liquidity driving the market.
All eyes were fixed on the dazzling 56 per cent surge by China State Construction Engineering Corporation on its debut. Its US$7.3 billion (S$10.5 billion) initial public offering is the world's biggest in a year.
But the main Shanghai Composite Index still suffered its biggest one-day drop this year, tumbling as much as 8 per cent before recovering slightly to close 5 per cent down at 3,266.43.
In line with China's sell-off, the benchmark Straits Times Index (STI) also lost ground and slid to as low as 2,567.66 in early afternoon trade before clawing back some ground to close above 2,600.
It ended 19.98 points or 0.76 per cent lower at 2,604.06. The dent in stock prices is not considered significant, given that the STI had climbed 6.89 per cent over the past four trading sessions.
Hong Kong's Hang Seng Index fell 2.4per cent while markets in Taiwan and South Korea incurred mild losses.
Overnight, Wall Street had digested a mixed bag of news, with a decline in consumer confidence offset by a monthly rise in home prices.
Local trading volume was a healthy 2.96 billion shares worth $2.39 billion.
Of the 30 STI component stocks, only five managed to defy the market slide.
DBS Group Holdings fell 36 cents or 2.62 per cent to $13.36 and United Overseas Bank lost 50 cents to $16.88 after some analysts deemed the stocks' recent gains as excessive.
'After a relentless rally, we deem it timely to lock in some profits, particularly on DBS,' said CIMB analyst Kenneth Ng, who downgraded the stock to 'neutral' from 'outperform'.
Citigroup analyst Robert Kong said the market is already factoring a strong second-quarter earnings performance.
'If Singapore can pull out of recession in the third quarter and the banks deliver second-quarter numbers ahead of our above-consensus forecasts, then the recent rally might be sustained,' he said.
Among other blue-chip decliners, Singapore Exchange fell 26 cents to $8.52 while CapitaLand lost six cents to $4.
Indofood Agri Resources surged 10 cents or 7.04 per cent to $1.52, its highest since last August. DBS Vickers analyst Ben Santoso said the palm oil firm is expected to report significant gains quarter-on-quarter on higher prices, higher volumes and foreign exchange gains.
Stats ChipPac fell 3.5 cents or 4.73 per cent to 70.5 cents after reporting a 90 per cent slump in second-quarter net profit to US$2.2 million (S$3.1 million) compared to the same period a year earlier. Its revenue declined 26.1 per cent to US$320.7 million.
Profit-taking was also widespread in the broader market, with the FTSE ST Mid Cap and Small Cap Indices falling 0.12 per cent and 0.41 per cent respectively.
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