Bulls And Bears

Local shares close at lowest level since 2009

Virus fears spark sell-off even as Fed cuts rate, China posts dismal data for Feb

Local shares closed at their lowest level since 2009 yesterday, as panic over the virus outbreak sparked a massive sell-off. The sour mood was not helped by another emergency rate cut in the United States and disappointing February economic data releases from China.

Straits Times Index (STI) counters were mostly in the red at the opening bell, with the index falling 3 per cent early on. The blue-chip index trended downward as the session went on to close 138.23 points, or 5.3 per cent, lower at 2,495.77.

All but one - Yangzijiang Shipbuilding - of the STI's 30 components ended the day in the red.

Yesterday's close was the STI's lowest since July 2009. The STI is now in bear territory, down 26.9 per cent from a 52-week high of 3,415.18 hit on April 29 last year.

Overnight, the US Federal Reserve cut its rate to 0 per cent to 0.25 per cent, the lowest range since the 2008 global financial crisis. The central bank also pledged to buy US$700 billion (S$995 billion) in bonds in a return to quantitative easing.

The Bank of Japan and the Hong Kong Monetary Authority eased rates after the Fed's decision.

Mr Jeffrey Halley, Oanda's Asia-Pacific senior market analyst, said yesterday share performance in Asia suggested that these policy measures are not enough to calm markets spooked by how global the Covid-19 outbreak has become.

Mr Vishnu Varathan, Mizuho Bank's head of economics and strategy for the Asia and Oceania treasury, noted that the Fed's measures were "highly encouraging, although by the Fed's own admission, monetary policy lacks the more intimate and targeted reach of fiscal policy".

Singapore banks continued their run of losses. DBS Bank dropped 4 per cent to $18.58, OCBC Bank finished 4.1 per cent lower at $8.70 and UOB fell 3.4 per cent to $19.45.

The lenders might be hovering at lows last seen in 2017, but retail investors found value in buying them amid recent sell-offs.

With countries imposing more travel restrictions, the travel and leisure sectors continue to take big hits. Singapore Airlines closed 6.4 per cent down at $6.74, its lowest since April 2003.

Yangzijiang added 0.6 per cent to 80 cents. It said yesterday that it won a US$1.15 billion contract to build up to 10 vessels.

The iEdge S-Reit Index, which tracks all property trusts listed here, dived 129.07 points to 1,152.10. Trading volume here was 2.16 billion shares worth $2.51 billion, with losers trumping gainers 444 to 122.

A version of this article appeared in the print edition of The Straits Times on March 17, 2020, with the headline 'Local shares close at lowest level since 2009'. Print Edition | Subscribe