STI falls below key 3,300 level

SINGAPORE — Asian stock markets came under pressure yesterday, with Singapore’s benchmark Straits Times Index (STI) dipping below the key 3,300 level amid growing concerns that geopolitical tensions in the Middle East and Ukraine would hinder global growth.

An unexpected surge in China’s exports, which jumped 14.5 per cent last month from a year ago, failed to offset the jittery mood among investors, although the data did help to contain the losses in Singapore and the region.

The STI fell 0.8 per cent to close at 3,288.89 points yesterday, the lowest in more than a month.

Analysts whom TODAY spoke to said the latest development in the Middle East crisis had spooked investors, leading to many opting to cash out of the stock market, which has been rising from its February low.

“The decline is linked to United States comments about Iraq and I think there’s also some long overdue consolidation, because the market has actually had a rally this year … It’s probably profit-taking because there’s some uncertainty,” said Mr Kevin Scully, executive chairman of NetResearch Asia.

US President Barack Obama on Thursday authorised air strikes on parts of Iraq, sending a chill through investors already unnerved by retaliatory sanctions from Russia against the West and weak economic data from Europe.

Major Asian bourses opened lower following the overnight decline on Wall Street and slid further into negative territory by the end of their trading sessions. Japan’s Nikkei-225 led the slide by plunging 3 per cent, while South Korea’s KOSPI and Hong Kong’s Hang Seng Index shed 1.1 per cent and 0.2 per cent, respectively.

“Asian markets opened slightly lower, but we saw such a deep sell-off after and I would mainly attribute it to the development in Iraq … I do foresee markets, going into the US opening, to be on the cautious end,” said CMC Markets analyst Desmond Chua.

However, the Shanghai Stock Exchange Composite Index closed 0.3 per cent higher, supported by China’s healthy trade data.

For the STI, the 3,300-point remains the key level to watch, analysts noted, with some saying the current dip was likely temporary.

“The STI will likely hover around this level for a bit. Geopolitical concerns come and go. They are usually the surprises and unexpected events that create such volatility, but as markets start to price in this development, these concerns usually fade off into the background,” said Mr Chua.