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WALL Street's overnight jitters caused a sell-off among blue chips on the local bourse yesterday, but failed to dampen the party spirit for penny stocks.
The local bourse is now a 'story of two markets', say market watchers. One involves blue chips which track every movement on Wall Street and Shanghai closely. The other involves penny stocks whose charms have been luring traders in large numbers lately.
This duality means that a casual glance at the benchmark Straits Times Index (STI) might not give an investor the full picture of what is going on.
Yesterday, for instance, came a palpable sigh of relief as the STI ended 26.46 points or 1 per cent down, at 2,569.93, despite Wall Street's 2 per cent drop.
To many traders though, the real action lay elsewhere, as they pondered the latest bunch of penny stocks to capture the fancy of retail investors.
This strong buying interest helped to drive overall market volume to a hefty 2.59 billion shares worth $1.85 billion, despite the bruising which markets across the world were getting from Wall Street.
Some said the market was behaving like a casino, since the run-up of these smaller counters was hardly supported by any pick-up in their company businesses.
They see some irony in the fact that a genuine casino play, Genting Singapore, was the most actively traded counter, adding seven cents to $1.07, on 227.45 million shares traded.
'Somehow, the manner in which Genting is being snapped up gives the impression that if you feel uncomfortable purchasing the speculatives, you might as well buy into a real casino,' said a trader.
But that aside, some dealers said the strong buying interest in Genting could be due to a strongly bullish note put out by a foreign brokerage which said that it had 'run a number of blue-sky scenarios' which indicated that 'the stock could be worth as much as $3', even though it was keeping its $1.10 price target for now.
Sister firm Star Cruises also enjoyed spillover buying interest, gaining one US cent to 29.5 cents, with 46.2 million shares traded.
Other actively traded counters included Li Heng Chemical Fibre Technologies which rose two cents to 41 cents with 42.1 million shares traded, China Hongxing Sports which ended flat at 25 cents on a volume of 52.1 million shares, and frozen food maker Synear Holdings which closed unchanged at 34.5 cents on a volume of 44 million shares.
All three counters were among companies which a boutique fund - Centurion Investment Management - has poured its cash into in recent years.
Centurion is controlled by former UOB Kay Hian remisiers and first cousins David Loh and Han Seng Juan, who were known in the brokerage industry as the 'A-team' for their stockbroking success and for helping China firms to list here.
In a sign that life is returning to the new listings market, Passion Holdings gained 18 per cent from its issue price of 25 cents to close at 29.5 cents, on a hefty 98.4 million shares traded, when it made its trading debut yesterday.
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