Bulls And Bears

Singapore market hit by double whammy

STI slips 0.7% on lacklustre GDP figures and muted growth outlook

Local shares dipped yesterday on lacklustre gross domestic product (GDP) figures and a muted outlook for growth ahead.

The latest flare-up in the United States-China trade relationship did not help either as the Straits Times Index (STI) slid 22.20 points, or 0.69 per cent, to 3,183.26.

IG market strategist Pan Jingyi noted: "The Singapore market had to contend with the double whammy of the year-on-year GDP miss and lowered growth outlook, which kept prices in the red.

"The first-quarter reading of GDP at 1.2 per cent, the lowest reading since 2009, has been a drag on local market sentiment."

Mr Eli Lee, Bank of Singapore's head of investment strategy, said in a client note: "Given that Huawei's access to US chips is essential to its viability as a firm, this represents further escalation and the opening up of a new dimension of the US-China trade conflict. Not only has trust between the two sides been severely eroded, a genuine threat to Huawei's survival would risk a sharp retaliation from China."

Trading elsewhere in Asia was mixed. China advanced 1.2 per cent and Australia gained 0.4 per cent, but Japan fell 0.2 per cent and Hong Kong closed 0.5 per cent lower.

Trading volume here clocked in at 1.21 billion shares worth $1.21 billion, with losers outnumbering gainers 281 to 121. There were 21 of the 30 STI stocks in the red.

Yangzijiang Shipbuilding, which went ex-dividend yesterday, was the bourse's most traded stock, closing 2.1 per cent lower at $1.44 with 32 million shares changing hands.

Even though the US has limited the blow to Huawei, tech counters here saw sell-offs as investor sentiment continued to dip.

AEM Holdings, which tests and develops cabling links for Huawei, lost 3.6 per cent to 93 cents.

Concerns over local growth and trade tensions are keeping the market on edge. Insiders said investors and traders have exited positions in growth and trade-sensitive cyclical stocks.

These included the local banks, which all ended in the red. DBS lost 0.6 per cent to $25.74, OCBC Bank dropped 0.5 per cent to $11.09 while United Overseas Bank fell 0.6 per cent to $24.83.

New positions were entered into on defensive counters with a strong local presence like telcos and food and beverage players.

Singtel ended flat at $3.14 while StarHub added 0.7 per cent to $1.53. ThaiBev added 0.6 per cent to 78.5 cents and Sheng Siong closed unchanged at $1.06.

A version of this article appeared in the print edition of The Straits Times on May 22, 2019, with the headline 'Singapore market hit by double whammy'. Print Edition | Subscribe