By Alvin Foo

LIKE bears resurfacing after winter hibernation, investors have been tiptoeing back into the local stock market in the past fortnight after months of sitting on the sidelines.

Remisiers told The Straits Times that some have been taking advantage of plummeting prices and low valuations to accumulate blue chips while many others are speculating on intra-week movements with a 'hit-and-run' strategy.

The plunge and slight rally has resulted in handsome profits for some of their clients.

However, the market experts urged caution as turbulence is expected to remain till year-end, with sharp volatility the order of the day.

CIMB-GK Securities chief executive Carol Fong said: 'They're tiptoeing back into the market. The stocks sold down badly are the ones coming back, such as marine stocks.

'We've also seen movements in plantation stocks, as commodities have strengthened. We also saw interest in S-chips (Chinese shares listed here).'

Remisier Albert Fong said: 'They've been nibbling for some weeks now, and some picked up more shares when the fear factor struck.'

And this is not just limited to Singapore. Individuals in Japan bought a record net US$10.2 billion (S$15.5 billion) of stock last month, said the Tokyo Stock Exchange.

Dealers point to bloody October as the main catalyst for the revival in interest.

According to financial information provider Standard & Poor's Index Services, world equity markets registered their worst month in history, as investors lost an estimated US$5.79 trillion last month.

In Singapore, $123.5 billion was erased from the market value of stocks here last month, with the Straits Times Index (STI) hitting as low as 1,473 points late last month. It has since recovered to 1,759.14 points at yesterday's close.

Another key driver for increased market activity was the United States' presidential election.

Last Wednesday, shares traded here hit the highest level since late March, with a whopping 2.34 billion worth $1.68 billion exchanging hands.

Dealers said the investors have been picking up mainly battered blue chips such as CapitaLand, SembCorp Marine, Keppel Corp and Singapore Airlines.

But interest in bank stocks has been muted, as investors were wary of the poor earnings outlook.

Industry experts also cautioned that this revival may be short-lived.

Remisier Alan Goh said: 'That's because they're mainly hit-and-run investors who hold the shares for less than a week before cashing out.'

Some market players are betting on more volatile times ahead, thus they are in no hurry to take the plunge.

As retail investor C. S. Lim said: 'I'm sure the STI would sink again as the financial turmoil is hardly over, so it's better to remain cautious. Profit-taking will return soon, and we could see the STI dropping to 1,600 again.'

How low must the STI get before more investors jump in?

Ms Fong said: 'We expect to see fresh interest at 1,400-1,500 points. I think people will come in to bargain hunt around that level.'

Analysts say the STI may have hit a 'temporary bottom' at 1,473 - down 62 per cent from last year's peak of 3,906.

But as global recession looms, the more bearish players are predicting a low of around 1,200 - reminiscent of the 2003 level seen during the Sars period. That should see even more buyers take the plunge.

Remisier Teo Huay Leng said: 'Some clients are looking at the previous low of 1,400 but that may be hard to repeat. A level of 1,700 should be pretty safe if you're looking at a long-term investment.'

This article was first published in The Straits Times on November 15, 2008.