Capitalisation dips just 1.8% in stark reversal from October 2008
By WINSTON CHAI
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FEARS of another black October have turned out to be largely unfounded. The capitalisation of the Singapore stock market declined a mere 1.8 per cent at end-October to $633.1 billion, from $641.7 billion a month ago.
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The latest October scorecard marks a stark reversal of fortunes from this time last year when $123.5 billion was wiped off the Singapore stock market as companies around the world were mired in a deep economic recession.
A year on, there were initial signs of another bummer October for global equities when the blue-chip Dow Jones Industrial Average in the United States kicked off the trading month by shedding 203 points or 2.09 per cent to 9,509.28.
The index then recovered to go past the 10,000 mark before a slight pullback on Oct 28, but news that the US is finally out of a recession sparked yet another rally 24 hours later.
In Singapore, the benchmark Straits Times Index (STI) went through a similar see-saw ride in a seasonally weak month.
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A mid-month rally tapered off towards the end as investors chose to stand on the sidelines before local corporate heavyweights such as Singapore Telecommunications (SingTel) and DBS kick-started their third-quarter reporting season. Yesterday proved to be an exception to the rule. Investors sent the STI up 18.82 points to close at 2,651.13 points after digesting the positive US economic data but market watchers believe the rally is short-lived.
'The falling daily turnover, especially among STI stocks, probably the lowest in recent years, will continue to take its toll on sentiments,' said AmFraser analyst Najeeb Jarhom in his research note.
'While a concerted selling spree does not appear to be on the horizon as strong liquidity and sidelined players are still on the lookout for buying chances, prospects of a dull market interspersed with weak rallies may cause fund managers to postpone making their presence felt until they open their books in January,' he said.
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'The majority of markets (in Asia-Pacific) are pulling back from recent gains, as profit-taking and risk increase,' added Credit Suisse analyst Michael Macdonald.
Property-related plays including CapitaLand, K-Reit, Ascott Reit and Suntec Reit were among the favourites in October with their market capitalisation rising by between 9.9 per cent to nearly 80 per cent.
K-Reit was the star performer of the lot, chalking up a 76.3 per cent increase in market cap to $1.39 billion. On Oct 13, the office trust posted an 18 per cent increase in third-quarter distributable income to $18 million following positive rental reversions.
Banking stocks were lacklustre as investors were still not fully sold on their recovery story. OCBC Bank surprised industry pundits on Wednesday by posting a 12 per cent rise in Q3 profits to $450 million. United Overseas Bank (UOB) did the same yesterday by registering a 5.3 per cent rise in Q3 net income to $500 million.
OCBC lost 0.9 per cent of its market cap to end-October with $24.9 billion, while DBS dipped 1.7 per cent to end the month with $29.8 billion. UOB's market capitalisation rose 1.8 per cent to $26 billion.
Telcos StarHub and SingTel were weighed down by the English Premier League (EPL) broadcast rights fight during the month. StarHub was the bigger victim of the two with its market value falling 12.9 per cent in October to $3.2 billion on fears that its EPL loss to SingTel could result in an exodus among its pay-TV customer base.
Similarly SingTel - the largest company in Singapore by market capitalisation - lost 9.5 per cent of its stock value during the month to $46.8 billion amid speculation that it may have paid a high price for its EPL victory.
Eighty-seven stocks are now in the billion-dollar club on the STI, with K-Reit being the only new member making it in October.
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