Source : Straits Times – 15 Sep 2009
GOVERNMENT plans to crack down on excessive property speculation took the wind out of investors’ sails yesterday afternoon and sent the Straits Times Index (STI) lower.
On the first trading session of the week, the market had opened sluggishly as it took its cue from Wall Street’s weaker close last Friday, but it recovered in late morning trading.
But National Development Minister Mah Bow Tan’s announcement at lunchtime of measures to dampen any brewing property speculation hit sentiment dramatically.
He had said the scheme in which developers absorb the interest would be axed, while the confirmed list of land sales would be re-started, meaning a regular supply of sites and relieving the pressure on prices.
The news sent the market to its day-low of 2,631.48 points about half an hour before the end of the trading session, before it rallied slightly to 2,639.74 points. That was 41.29 points, or 1.54 per cent, down from last Friday and the lowest level since Sept 4.
Of the 30 STI component stocks, 24 were losers, three were unchanged and three were gainers.
Neptune Orient Lines rose three cents to $1.90, Jardine Matheson increased by US$1.80 to US$31.80, while Jardine Strategic was up four US cents to US$17.30.
The STI’s property counters were down on the day.
City Developments (CDL) shed 84 cents, or 7.6 per cent, to close at $10.24 on a volume of 6.33 million shares. CapitaLand lost 15 cents, or 3.9 per cent, to close at $3.72. And Fraser & Neave slipped three cents to close at $3.98 on a volume of 1.42 million shares.
The FTSE ST Real Estate Index lost 20.75 points to close at 587.14 while the FTSE ST Real Estate Holding and Development Index was 28.88 points lower at 620.76.
Non-STI property counters also saw a good deal of red ink. In terms of percentage losses, Ho Bee – which has projects in Sentosa Cove – was among the worst hit, losing 10.3 per cent to close at $1.39.
GuocoLand slipped 8.2 per cent to $2.24. Keppel Land was 6 per cent the worse for wear, closing at $2.66.
Property counter weakness was attributed to the Government’s new anti-speculation measures, as well as consequent worries about the impact on the property sector.
Boutique corporate finance firm NRA Capital executive chairman Kevin Scully said the market may have overreacted yesterday to the Government’s move. He added that some may have seen it as an opportunity to take profit given that property stock prices had risen considerably.
AmFraser Securities senior vice-president of research Najeeb Jarhom also thought some profit-taking might have set in. He noted that CDL had surged more than 10 per cent in the month, while Capitaland had also enjoyed a rally.
Mr Scully said that many analysts had swung from being extremely pessimistic to being bullish.
Property stocks have been upgraded, based on the record number of home sales recently. Singapore’s home sales reached 10,000 homes in the first seven months of the year, more than the 4,300 units sold for the whole of last year.
But while many companies managed to meet or exceed analysts’ half-year forecasts, there is now a chance that some of them will disappoint given that analysts have all upgraded the forecasts, Mr Scully reckoned.
And this may lead to a correction in share prices.
Volume was at a reasonable level yesterday with 2.4 billion shares traded, but value was down at only $1.8 billion. This was mainly down to volume being driven by trading activity in penny stocks.
Sapphire was top of the ‘most actives’ list, with a staggering 230 million shares traded. It closed unchanged at two cents.
Genting Singapore, which announced a $1.6 billion rights issue last week, continued to remain in the spotlight. It lost further ground – four cents – to close at $1.06. Volume was 169.8 million shares.
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