Local shares resumed their slide yesterday as sentiment worsened due to a spike in Covid-19 cases in South Korea as well as signs that the virus has established a foothold in Italy after a cluster emerged there.
Mr Vishnu Varathan, Mizuho Bank's head of economics and strategy for the Asia and Oceania treasury, noted that fears of secondary infections growing rapidly outside China have "come home to roost".
This, he added, has resulted in risk assets taking a hit as investors rush for safe havens like gold. Spot prices for the yellow metal were comfortably over US$1,660 an ounce in the Asian trading session.
The air of concern sent the Straits Times Index lower from the opening bell. The benchmark index extended its early losses as the session wore on to finish at 3,142.20, shedding 38.83 points or 1.22 per cent.
This was the blue-chip index's lowest close since Feb 3 and had all but one - Singtel - of its 30 components ending in the red.
Singapore's largest telco was up for most of the session before dipping late to close unchanged at $3.10. A remisier said: "Singtel, which is trading at a five-month low, could continue to see interest in the coming days due to recent price weakness."
The local banks, which had recently reported fourth-quarter results that were in line with expectations, all ended lower. DBS fell 0.9 per cent to $24.85, OCBC Bank eased 0.9 per cent to $10.92, and United Overseas Bank (UOB) dived 1.6 per cent to $25.28.
Jefferies Singapore analyst Krishna Guha noted: "Given the uncertain economic outlook, growth and margin guidance has been lowered (for UOB) while credit cost is likely to see a spike in the near term.
"While regional exposure and IT investments should augur well in the medium term, near-term uncertainty poses downside risk to earnings." He downgraded UOB to "hold" and cut its price target to $27.
Venture Corp fell 4.1 per cent to $16.08 ahead of its fourth-quarter results on Thursday.
JPMorgan lowered Venture to "underweight" and cut its price target to $14.70 last Saturday, while RHB Research upgraded it to "buy" with a target price of $19.30.
Trading volume came in at 1.8 billion shares worth $1.56 billion, with losers outpacing gainers 384 to 112.
Elsewhere, equity benchmarks in Australia, China, Hong Kong, Malaysia, South Korea and Taiwan were a sea of red, with Seoul's Kospi Index faring the worst. It dived 3.9 per cent - its steepest single-day decline since October 2018.
