Singapore shares close lower, bucking regional trend
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The STI was down 0.4 per cent or 15.8 points from the highs of Sept 23, at 3,622.74.
ST PHOTO: SHINTARO TAY
Benjamin Cher
SINGAPORE - The Straits Times Index (STI) faltered on Sept 24, as regional indexes posted gains at the end of the trading day.
The STI was down 0.4 per cent or 15.8 points from the highs of Sept 23, at 3,622.74.
Across the broader market, advancers outnumbered decliners 405 to 219 after 1.41 billion shares worth $1.7 billion changed hands.
On the STI, DFI Retail Group was the biggest gainer, closing up 9.1 per cent or 17 US cents at US$2.03 on Sept 24, possibly buoyed by the divestment of a Chinese supermarket chain.
The trio of local banks ceded Sept 23’s gains. DBS Bank was the top loser on the STI, down 1.6 per cent or 63 cents at $38.83. OCBC Bank lost 0.9 per cent or 14 cents to $15.50, while UOB closed 0.8 per cent or 26 cents lower at $32.99.
ST Engineering was the second-largest loser on the STI, declining 1.5 per cent or seven cents to $4.65.
Across the region, major indexes rallied, with South Korea’s Kospi gaining 1.1 per cent and Hong Kong’s Hang Seng Index up 4.1 per cent. Closer to home, the FTSE Bursa Malaysia KLCI was up 0.3 per cent.
The Fed’s unusually large rate cut appears to be a pre-emptive move to signal the lengths it will take to secure a soft landing, noted Ms Seema Shah, chief global strategist at Principal Asset Management.
A 50-basis point cut has in the past been associated with crisis and recession. “As a result, moves of this size typically prompt major market angst as investors begin to price in economic and financial disaster,” Ms Shah said.
However, there is no sign of financial strain or asset bubbles bursting, and economic growth, though slowing, is supported by robust household and corporate balance sheets. Ms Shah reckons that, with the sequence of rate cuts, recession risk has receded and markets are responding positively.
Since 1985, the S&P 500 has posted five of its 10 best years following interest rate cuts by the Fed, which were made during non-recessionary periods.
“Stretched valuations may temper US equity gains this time, but the historical perspective suggests investors have good reason to be cautiously optimistic,” said Ms Shah. THE BUSINESS TIMES