Regional markets spooked by Wuhan virus

Regional investors were largely unmoved by Wall Street's slightly positive performance on Wednesday after some United States firms turned in robust financial results. They remain unsettled over how the Wuhan coronavirus might spread across the Chinese New Year holidays.

The uncertainty left the Straits Times Index (STI) mired in the red yesterday. It closed at 3,234.56, down 19.37 points or 0.6 per cent. North-east Asian benchmarks in China, Hong Kong, Japan and South Korea averaged falls of 1.5 per cent.

The virus draws parallels to the Sars epidemic and investors are rightfully concerned though the Chinese authorities have been steadfast in containing the spread by putting Wuhan in quarantine.

With that in mind, Oanda Asia-Pacific senior market analyst Jeffrey Halley noted that the Asian market performance "looks more precautionary than panic-driven".

Trading volume continued to be high at 2.19 billion shares worth $1.44 billion, with losers trumping gainers 285 to 152.

Thai Beverage, the biggest STI gainer in 2019, was one of the index's main laggards, with shares down 9 per cent this week after falling 0.6 per cent to 79 cents yesterday. Nomura analysts attributed the share underperformance to "profit-taking as well as market concerns over the new law against drunk driving in Vietnam" but added that recent price weakness presented an opportunity to accumulate ThaiBev, which trades at cheaper valuations to peers.

Though the Reit (real estate investment trust) earnings season was under way, attention was on the latest attempt at consolidation. CapitaLand Commercial Trust (CCT) and CapitaLand Mall Trust (CMT) unveiled plans on Wednesday to form CapitaLand Integrated Commercial Trust (CICT), which will be the biggest Reit in Singapore.

DBS Group Research analysts Derek Tan and Rachel Tan said: "CICT will be empowered with greater financial capacity and better ability to compete globally to take on bigger projects and/or redevelopments to drive better returns to shareholders."

CCT units fell 0.5 per cent to $2.12 and CMT units dipped 0.8 per cent to $2.57. CapitaLand, the sponsor of the Reits, slipped 1 per cent to $3.85.

After posting a 2.9 per cent rise in fourth-quarter distribution per unit to 1.4 cent, Keppel Reit, likely to be the sole pure-play office Reit here if the CMT-CCT merger goes through, closed flat at $1.27. The DBS analysts are bullish on prospects, citing its "long weighted average lease expiry of 4.9 years, strong committed occupancy and the ability to sign higher than market rents".