Singapore shares slide in tandem with regional bourses and Wall Street

SINGAPORE – The fiscal uncertainty that has soured market sentiment in the US sparked a sharp sell-off on Wall Street overnight and helped send most Asian bourses sliding into the red on May 22.

The Straits Times Index (STI) here got off lightly, sliding just 2.46 points or 0.1 per cent to 3,880.09, with losers hammering gainers 288 to 178 on trade of 1.1 billion securities worth $1.4 billion.

Private banking and asset management group LGT commented that the tepid demand for a US$16 billion (S$20.7 billion) tranche of 20-year US bonds reflected investor concern over America’s rising debt and fiscal situation.

Congress’ tax and spending Bill – if passed and expected to raise America’s US$36.2 trillion debt – and Moody’s recent downgrade of the US sovereign credit rating put equity markets under pressure.

SPI Asset Management managing partner Stephen Innes noted that the high bond yields make it more difficult to justify today’s stretched equity valuations, and the earlier rally fuelled by the tariff detente could be capped.

Regional investors were certainly on edge after Wall Street’s major indexes all declined between 1.4 per cent and 1.9 per cent. The Nikkei in Tokyo fell 0.8 per cent, while Seoul’s Kospi and the Hang Seng in Hong Kong both dipped 1.2 per cent. Australia’s market slipped 0.45 per cent, giving up some of the gains that had lifted the index to a new 50-day high earlier in the week.

Back on the STI, Singtel closed up 2.6 per cent to a 52-week high of $3.95 after it posted $2.8 billion in net profit for the second half and announced a $2 billion share buyback. The counter was also the most traded stock and the index’s top performer.

Meanwhile, Japan Foods fell 4.6 per cent to a 52-week low of 21 cents. The Catalist-listed restaurant player had earlier flagged substantial red ink for the financial year ended March.

THE BUSINESS TIMES