1. StarHub +0.020
2. SingTel +0.020
3. SembCorp +0.010
The top 5 loser component stocks were :-
1. JSH 500US$ -1.070
2. Jardine C&C -0.900
3. JMH 400US$ -0.620
4. NobleGrp -0.425
5. CityDev -0.380
US markets fell average 3.5% yesterday night as events regarding Italy created the fear. Italian 2, 5 and 10-year bond yield all move above 7% creating a fear that Italy will need a bailout and being too big to fail and whether EU has the funds to bailout Italy did the damage to the stock markets. Italian are now being forced to vote on the austerity package tomorrow and a final vote will be on Sunday. Thereafter, current PM will step down and question remains who will take over and will he has the power and ways to reform/restructure Italy. Another news out of the Europe was German and French leaders were discussing possibility of trimming down EU ie kicking out Euro member and opt them back in later once their own debt issue is resolved. Asian bourses were on panic selling with these types of news. Nikkei closed -2.91%, SSE -1.80% and HSI -5.25%. STI dropped more than 3% intra-day but managed to rebound from low and closed -2.51% as in the later part of the afternoon, the selling down in Europe tame down coupling with positive US future help pushed the index up from low. For STI main focus of the day apart from EU issue was NobleGrp. Yesterday NobleGrp reported a 3Q loss and with news of CEO resigned that caused a lot of uncertainty to investors. NobleGrp plunged more than 25% in a very high volume. That sentiment also affected other commodity stocks like Olam and Wilmar. Together, the commodity index stocks helped contributed about 1/4 of STI drop and the surged in volume in NobleGrp also lifted the daily STI volume to above 1.5 billion.
In the morning SingTel reported a miss expectation earning but with 6.8cents dividend being declared that some how supporting SingTel share prices and in turn STI index.
While investors are reacting to events from Italy on fear of it will collapse with tumbling of stock markets, the sell off could be due to over-reaction as there is no concrete evidence apart from Italian bond yields hit above 7% to affirm that Italy indeed need bailout. As such any panic selling might be overdone for the time being until proven correct.
