Asian markets hit by profit taking after record high

MARKET sentiment was badly spooked by a strong wave of programme selling by hedge funds in late afternoon trading, which forced several Asian markets to relinquish the fresh highs conquered earlier on Wednesday.
In particular, China stocks in Hong Kong and Singapore were badly bruised by the selldown. The benchmark Straits Times Index here fell 39.21 points, or 1 per cent, to 3754.62, after hitting an intraday record high of 3851.88, while Hong Kong's Hang Seng Index was down an eye-popping 719.81 points, or 2.5 per cent, to 27,479.94.
But the very volatile market conditions bolstered overall market volume to 3.31 billion shares worth $3.69 billion. On the scoreboard, there were 684 losers and 234 gainers.
"Going by the way the selling across the region is co-ordinated, it is obvious that hedge funds are at work, taking profits on the recent big gains on China stocks. At 2.30, STI and Hang Seng were in top form, only to collapse almost simultaneously at around 3.30," noted a remisier on Wednesday.
Big blue-chip losers here included DBS Group Holdings which lost 30 cents to $22.20 and property giant City Developments which fell 60 cents to $16.30. But bucking the trend was Singapore Exchange which closed at a record $15.20, after advancing 80 cents.
On the broad market, China plays were the big losers, as they succumbed to a second day of profit-taking, after racking up spectacular gains recently. The PrimePartners China Index closed 11.4 points, or 3.7 per cent, down at 298.5. Among the losers were punters' favourites such as Sino-Environment lost 28 cents to $3.64, while frozen dumpling maker Synear Food fell 16 cents to $2.15.
Looking ahead, Morgan Stanley Research noted in a report on Wedneswday that Asia-Pacific markets have become unattractive after the sharp run-up last month.
It said: "The 12-month forward price-earnings ratio of 16.6 times is at a 13.1 per cent premium to the MSCI World Index and a 9.6 per cent premium to the US S&P 500 shares. ..Further upside most likely requires strong liquidity conditions, substantial fund inflow from both foreign and domestic investors and euphoric investor sentiment."

<---------- Hope tomorrow is a better day, not another sea of red