Singapore stocks fall nearly 3% as worries over banking sector and growth slowdown hit Asia

A man passes a board showing the Straits Times Index (STI) at the central business district in Singapore.
A man passes a board showing the Straits Times Index (STI) at the central business district in Singapore.PHOTO: REUTERS

SINGAPORE - Commodity, property and oil and gas stocks led the fall in the Singapore market on its first day of trading after the two-day Chinese New Year holidays.

The local bourse was dragged down by the Tokyo market rout on Tuesday, as well as the global sell-off in bank stocks from Europe to the United States to Japan.

The benchmark Straits Times Index fell nearly 3 per cent in the first 15 minutes of trading, or 78.1 points to 2545.11.

Commodity stocks Noble and Golden Agri-Resources took the lead to plunge more than 5 per cent. Noble dropped 6.06 per cent or two Singapore cents to 31 cents, while Golden Agri-Resources lost 5.19 per cent or two cents to 36.5 cents.

Property stocks such as Global Logistic Properties and City Development also took a beating. Global Logistic Properties was down 4.17 per cent or 7 cents at S$1.61 and City Development dropped 3.9 per cent or 28 cents to S$6.90.

The local banks were also some of the top losers with all three banks shedding nearly 3 per cent.

DBS was down 2.79 per cent or 38 cents at S$13.22, OCBC dropped 2.86 per cent or 22 cents at S$7.47 and UOB decreased 2.63 per cent or 47 cents at S$17.40.

"The STI is catching up on the decline in the overseas markets upon return from the Chinese New Year break," said Mr Bernard Aw, market strategist at IG.

"There was no guidance from the Chinese equities, which are closed for the week," he added.

"I expect bearish sentiments to underline Singapore for the rest of the week. However, some relief rally in the US markets could provide a temporary floor for Singapore equities, until the resumption of China's onshore markets next week."

Mr Aw noted last Friday's rally in STI was due mainly to a strong gain in heavy-weight Singtel shares, which might be positioning plays ahead of its earnings report this Friday.

Besides Singtel, some other STI component stocks like SATS and ComfortDelgro, will also be announcing their earnings this Friday. Mr Aw thinks this could bring about some volatility in the local bourse.

Another thing to watch would be a bunch of oil-related reports. The Opec monthly oil report and US EIA weekly report, both due later on Wednesday, could be potential triggers for oil prices to face renewed downward pressure. Clearly, this would hit commodity and energy-related stocks hard, should it materialise.

In Japan, the stock rout intensified on Wednesday with the Nikkei falling 1.2 per cent after sinking 5.4 per cent on Tuesday. Australia's S&P/ASX 200 Index dropped 1.4 per cent.

Markets in China, Hong Kong, Taiwan and South Korea remain closed for the Lunar New Year holidays.

Futures on the S&P 500 were down 0.2 per cent after rallying as much as 0.6 per cent in early Asian trading.

Stock markets remain volatile after being hit hard early in the week by worries about the health of the euro zone banking sector, with a very easy monetary policy seen crimping bank profits and consequently their ability to repay debt.

The yen, seen as a safe haven by investors, rose for a third day this week. The US dollar traded at 114.96 yen after sinking to a 15-month low of 114.205 overnight.

Amid continuing global volatility and fears of another world recession, markets are looking to what Federal Reserve Chair Janet Yellen will say in her semi-annual testimony the US Congress later on Wednesday.

In commodities, crude oil prices trimmed some of their sharp losses suffered overnight. US crude was up 1.6 per cent at US$28.39 a barrel. Crude sank nearly 6 per cent on Tuesday after weak demand forecasts from the US government pressured prices.

kohping@sph.com.sg