Published September 8, 2008
S'pore investors dump US stocks in Q2
They sell a net US$1.45b of corporate stocks traded on the NYSE
By CHUANG PECK MING

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SINGAPORE investors, who have been bargain-hunting on Wall Street, made a sharp U-turn in the April-June quarter (Q2) as US stock prices headed further south towards bear territory.

They dumped a net US$1.45 billion worth of corporate stocks traded on the New York Stock Exchange (NYSE), according to the latest figures released by the United States Treasury.
This was a big turnaround from Q1 and Q4/2007 when cash-rich Singapore investors snapped up a net US$11 billion and US$4 billion of equities respectively, as prices in the US stock market took a dive.
And unlike in the past, the investors did not seek refuge in US Treasury bonds. According to the latest US Treasury data, Singapore investors continued to dispose of T-bonds, selling a net US$3.41 billion in Q2.
In Q1 they sold a net US$3.71 billion of T-bonds.
US stock prices continued to plunge in Q2 - the Dow Jones Industrial Average sank 7.44 per cent in the quarter - but this time, according to analysts, Singapore investors who were earlier picking up what they saw as cheaper stocks turned nervous and started reducing their holdings of US shares.
'The investors probably expect prices to fall some more, before they go back to buying,' said one Singapore-based stockbroker, who noted that oil prices surged past the US$140 level in Q2 - and there were renewed worries about the health of the financial system, inflation and global growth.
For the first half of the year, Singapore investors were still net buyers on the NYSE, posting purchases of US$9.5 billion in a period that saw the Dow flirt with bear territory at the end of June, as the index tumbled nearly 20 per cent from its high in October 2007.
Other Asian investors also grew wary of the bleak outlook on Wall Street, leading them to cut back on their purchases. Asian net acquisitions of US equities fell from US$37.61 billion in Q1 to US$13.58 billion in Q2, according to US Treasury numbers.
Hong Kong investors were the odd men out among Asian investors, increasing their stake in US equities by a net US$12.36 billion in Q2, up from a net purchase of US$9.83 billion in Q1.
Japan, the biggest Asian investor on the NYSE, wound down investments to a net US$1.92 billion in Q2, from US$5 billion in the previous quarter.
Globally, investors scaled down sharply their investments on Wall Street from a net US$29.65 billion in Q1 to US$2.59 billion in Q2. But the Europeans - the single largest foreign players in US stocks - increased their purchases by a net US$4.49 billion, up from US$1.49 billion in Q1.
Global investors kept up with their holdings of T-bonds in Q2, acquiring a net US$110.96 billion of the debt instruments, slightly higher than the US$106.43 billion in Q1.
But Asians slashed their purchases of T-bonds from a net US$49.12 billion in Q1 to US$4.82 billion in Q2.
The Chinese, however, one of the biggest investors in T-bonds, expanded their portfolios by US$24.24 billion, up from US$20.17 billion in Q1. The Japanese almost halved their purchases to US$12.70 billion in Q2.