Published November 1, 2008
Black October
Listed companies get that shrinking feeling as market cap falls to 3-year low
By TEH SHI NING

Email this article

Print article

Feedback
IT has been more than three years since the companies listed on the Singapore Exchange felt so small - and they can blame October's massive sell-offs for this. The month just gone by saw $123.5 billion slashed off Singapore's stock market capitalisation as global jitters persisted and recession fears came true. The gloom will hover for some time as market observers say the worst is yet to come.

Market value has not plunged this low since end-May 2005's market capitalisation of $387.5 billion.
As the Q3 earnings season peaks only in November and more fund redemption can be expected with two months to go till year-end, analysts say that unpredictability is still the name of the game. The combined value of the 781 companies on the SGX stood at a three-year low of $391.5 billion yesterday evening, 24 per cent lower than the $514.9 billion recorded end-September.
Thus far this year, Singapore's stock market has shed over $200 billion, or 35 per cent of its capitalisation. Market value has not plunged this low since end-May 2005's market cap of $387.5 billion. After a roller-coaster month, the Straits Times Index ended yesterday at 1794.20 points, 23.94 per cent down from the 2358.91 points recorded after September's last trading session and a 48.23-per cent fall from the start of the year.
The number of billion-dollar stocks on Singapore's bourse shrank to 60 in October from 74 in September, while the number of stocks with a market value below $200 million rose to 610 in October from September's 584.
Related link:
Click here for the market cap of all SGX-listed companies
Just 102 listed counters, including those which had suspended trading, escaped having their market cap cut last month.
The three local banks' share prices have slumped on news of earnings downgrades, and all three ended October with market values slipping under $20 billion.
DBS Group was the worst hit as shares plunged to a five-year low earlier this week. Its market cap has tumbled 34.3 per cent to $16.7 billion in the past month. Oversea Chinese Banking Corporation's market cap fell 31.7 per cent to $15.3 billion while United Overseas Bank, which reported bleak Q3 earnings yesterday, saw its market value drop 22.5 per cent to $19.8 billion.
Property developers felt the heat too. Keppel Land, which recently reported a fall in Q3 profit, slid out of the top 50 rankings as its market cap fell 34.6 per cent to $1.3 billion. CapitaLand and City Developments, too, saw market value diminish by 6.9 per cent and 28.3 per cent to $8 billion and $5.7 billion respectively.
Volatile commodity prices meant the commodity stocks continued to suffer. Noble Group lost up to half its market value in the course of October. Its share price has since rebounded on forecasts of record profits, so it closed October 21.8 per cent down with a market cap of $3.4 billion.
Palm oil player Golden Agri-Resources fell 39.7 per cent to $1.9 billion and Olam fell 30 per cent to $2.2 billion. Wilmar International, the sixth largest stock on the exchange, slid a comparatively slight 1.6 per cent to finish with a market cap of $15.7 billion.
Shipping and offshore players Keppel Corp and SembCorp Marine also fell 42.9 per cent and 40.5 per cent, to $7.1 billion and $3.7 billion respectively. SIA fell 22.1 per cent to $13.1 billion.
Goh Mou Lih, head of research at Westcomb Securities, said: 'I think the turbulence isn't over yet; we're headed towards more volatility.'
Stephanie Wong, head of research at Kim Eng said: 'I'm hopeful for a gradual restoration of order in the financial markets. With interest rates trending south, corporates should breathe a little easier.'
According to a Citi equity strategy report released last week, 'bear markets typically do not hit bottom until the economy is at or past the worst quarter of a recession'. Citi economists expect the sharpest contraction in Singapore's economy in year-on-year terms to come only in the first quarter of next year.
In which case, the bear market has some way to go yet.