Singapore share prices closed 1.7 percent lower on Monday as traders locked in profits ahead of a key United States Federal Reserve meeting on interest rates, dealers said. They said regional sentiment was also punished amid a run on British mortgage lender Northern Rock which has raised fears that an international credit crunch was still ongoing.
The Straits Times Index closed down 60.09 points at 3,476.31 on volume of 2.04 billion shares worth 1.67 billion dollars (1.10 billion US). Losing issues overwhelmed gainers 173 to 659 with 769 shares unchanged.
The US Fed is expected to consider a cut in interest rates to help improve credit flows and ease stress in the housing market, which is experiencing its worst slump in decades and threatening the overall economy. CIMB-GK research head Song Seng Wun said the Singapore index will likely see profit-taking this week due to caution over the outcome of the Fed meeting.
"This week will be a testing week for equities. The index will be choppy in the coming days" Song said. Singapore on Monday reported its key exports rose an annual 11 percent in August, boosted by increased shipments of pharmaceuticals, which Song said supports the view that macro-economic fundamentals remain fairly good in the city-state and region.
"The worry is we could see more fallout from the US subprime problems as we saw in the UK," Song said. Banks were a key drag on the index, with DBS Group Holdings down 20 cents at 19.40 Singapore dollars, United Overseas Banking Corp down 70 cents at 20.80, and Overseas Chinese Banking Corp 15 cents lower at 8.70.
Property stocks retreated after their rapid gains last week. Keppel Land eased 10 cents to 8.05, City Developments was down 30 cents at 15.10 and CapitaLand was down 5 cents at 7.95. Neptune Orient Lines slide 33 cents to 4.82 and Singapore Airlines declined 30 cents to 18.70 dollars.
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