Bulls And Bears

Asian bourses hit as global worries flare up

Investors flee to safe-haven assets amid concerns over Brexit, Italy's Budget

It is a case of one step forward, one or two steps back these days, with regional markets taking a hit yesterday as the usual global concerns flared up again.

Wall Street hinted at what was to come with falls overnight amid geopolitical tensions, global growth concerns and prospects of higher United States interest rates.

Uncertainty in Brexit negotiations and the stand-off over Italy's Budget also sent investors fleeing towards safe-haven assets including the US dollar, now trading at around the highest level in two months.

Bourses across Asia took a hit.

Hong Kong's Hang Seng fell 3 per cent in afternoon trade.

The Nikkei 225 in Japan fell 2.67 per cent, and South Korea's Kospi declined 2.57 per cent.

China did not escape. Earlier gains sparked by the authorities' talk of shoring up the economy were largely erased, with Shanghai shares shedding 2.26 per cent.

"(Monday's) 4.1 per cent rally in the Shanghai Composite Index is likely to have been a dead cat bounce," said DBS Group Research strategists. "Any stimulus by China should be viewed not as a boost but as a cushion against a slowing economy against external headwinds."

CMC market analyst Margaret Yang said the regional sell-off was largely due to liquidity reasons.

"When there's no money here, there's no support for the market, and when funds are flowing back to US dollar-denominated assets, nobody can save the market from going down," she said.

Singapore's Straits Times Index fell 46.67 points, or 1.52 per cent, to 3,031.39, with losers outnumbering gainers 294 to 111 on trade of 1.95 billion shares worth $968.6 million.

Real estate stocks were battered, with City Developments falling 2.16 per cent to $8.14 and CapitaLand losing 2.24 per cent to $3.05.

An exception was Mapletree Logistics Trust, which rose 1.6 per cent after the midday break before closing flat at $1.23.

Analysts from OCBC Investment Research and DBS called "buy" on the stock after the firm said on Monday night that distribution per unit edged up to 1.958 cents from 1.887 cents for the second quarter.

Data out yesterday showed that core inflation in Singapore dipped to 1.8 per cent last month, lower than economists' expectations.

Ms Yang said the earnings season remains the biggest uncertainty in the weeks ahead here.

She added that the share sell-off and property cooling measures may have "substantial impact to this earnings season due to lower investment returns and slower bank loan growth".

A version of this article appeared in the print edition of The Straits Times on October 24, 2018, with the headline 'Asian bourses hit as global worries flare up'. Print Edition | Subscribe