By R SIVANITHY, Senior Correspondent

TO SAY it has not been a good week for stocks would be a bit of an understatement - after dropping 5 per cent in January, the Straits Times Index this week lost a further 62 points or 2.3 per cent. Virtually all of this came in yesterday's session in which the index plunged 61.42 to 2,683.56, its lowest so far in 2010.

Meanwhile, 2010's closing high of 2,933 on Jan 11 is not only 250 points away, it is also a fast-receding memory.

A rocky Wall Street, shaken by economic and earnings worries, has apparently combined with European sovereign debt concerns to bring the sellers out in force, no matter that all these negative factors have been well-known for months now.

In the case of the US market, warnings over over-optimistic earnings estimates have been circulating for several weeks, as have indications that economic growth is not really taking hold because of rising joblessness; in the case of Europe, the financial woes of Greece and the Balkan states already surfaced towards the end of last year and should have affected stock prices then, but didn't.

In both cases, upward momentum begot complacency and led investors to gloss over the negatives; today, downward momentum has forced them to the fore. Or if you prefer, where there was once greed, there is now fear.

Equally noteworthy is that China's bank tightening, oft-cited as a key factor behind January's selling, hardly warrants a mention barely two weeks on.

Speaking of banks, DBS was the first of the local three to release its 2009 figures. DBS made a 4Q09 net profit of $493 million, up 67 per cent after one-time items from a year earlier, while full-year net profit after one-time items was up 6 per cent at $2.04 billion.

In response, CIMB said it is upgrading DBS from 'under-perform' to 'neutral', primarily because of its underperformance in the past two months.

'Our target price remains unchanged at $16.29, based on 1.4x FY10 Price/Book Value. 4Q09 net profit of $493m was 17 per cent below our expectations but within consensus estimates. Trends were not particularly inspiring,' said CIMB. DBS yesterday dropped 16 cents to $14.04 amid a pullback in the overall market; for the week it lost 24 cents or 1.7 per cent.

The other big name to release details of its recent finances was Singapore Airlines, whose Q3 profit of $404 million announced mid-week led to the share price surging and a slew of 'buy' reports. Morgan Stanley, for example, set a $17 target and said that on a two- to three-year horizon, the stock could reach $21-22 on mid-cycle normalised earnings.

SIA fell on Thursday and lost 30 cents yesterday, ending the week at $14.10. Over the five days, however, it gained 28 cents or 1.3 per cent.

UOB-Kay Hian on Tuesday issued a Singapore strategy report in which it recommended buying the dips and that investors not place too much faith in the dictum 'as goes January, so goes the rest of the year'.

'Our analysis of the Singapore stock market using the STI as a proxy suggests that January's performance may not be a good indicator of the market outlook for the rest of the year. Over the past 20 years, our analysis suggests the full-year STI movement is consistent with January's performance in only 13 instances or 65 per cent of the time,' said UOB-Kay Hian.

It cited the improving employment outlook, rising M&A opportunities, accelerating GDP growth and strong property take-up rates as reasons to buy.

This article was first published in The Business Times.