Singapore neck-and-neck with Thailand for Asia's worst stock market

Singapore Airlines and ComfortDelGro are so far the worst performers on the index in 2020.
Singapore Airlines and ComfortDelGro are so far the worst performers on the index in 2020.PHOTO: ST FILE

SINGAPORE (BLOOMBERG) - Singapore stocks took a beating this week amid the twin uncertainties of the US election and the worsening pandemic in the West, almost replacing Thailand as Asia's worst equity market this year.

The Straits Times Index (STI) fell 1.1 per cent on Friday (Oct 30), taking the 2020 decline so far this year to 24.95 per cent, compared with a fractionally bigger 24.96 per cent loss for Thailand's SET index. The STI, which relies heavily on exports, is down about 4.5 per cent this week, among the region's worst performances.

A recovery in the South-east Asian nation's stocks from the market plunge triggered by the pandemic has been hampered by the economy's integration with global trade and supply chains, and a lack of technology shares in the index. More than 80 per cent of Singapore's benchmark is made up of cyclical equities - the most among regional peers. A resurgence in coronavirus cases in America and Europe and uncertainty surrounding stimulus in the US are expected to limit gains in the near term.

"Singapore is particularly sensitive to global risk-off sentiment, and risk appetite has worsened from the resurgence in virus cases and expectations of a slow pace of economic recovery," said Pan Jingyi, a strategist at IG Asia. "Some of the virus-affected regions are Singapore's key trading partners."

Singapore Airlines and ComfortDelGro are the worst performers on the index this year so far - down 46 per cent and 42 per cent, respectively - after the pandemic battered travel and forced people to stay home. A gloomy outlook for tourism could limit the stock market's re-rating potential, according to Suresh Tantia, an investment strategist at Credit Suisse Group.

That said, valuations are proving attractive for some as the STI trades at 13 times forecast earnings for the next year, in line with its 10-year average. In comparison, the MSCI Asia Pacific Index is trading at a multiple of 16 times, much higher than its historical average of 13 times.

Still, the STI's recovery has some way to go as investors await a stimulus package in the US, said Daniel Dubrovsky, an analyst at DailyFX. "The Senate is off for recess until later this month without a fiscal package, crushing hopes of an economic boost," which will keep the Singapore gauge under pressure, he added.