SINGAPORE - Investors sold off Singapore stocks on Friday afternoon (May 14) after the Government tightened Covid-19 restrictions in response to a worrying increase in the number of community infections.
The Straits Times Index closed down 2.2 per cent at 3,055.02 points, the lowest level since March 8. The selloff cut this year's gain to 7.57 per cent, less than the 13.2 per cent the index had clocked in the first four months.
From May 16 to June 13, dining in at restaurants and foodcourts will be prohibited and social gatherings will be limited to two people, Singapore's multi-ministry task force (MTF) on Covid-19 said. Working from home will once again be the default and employers will have to ensure that staff who can work from home do so.
A planned air travel bubble between Singapore and Hong Kong that was due to start on May 26 may be delayed further, the task force added in a press briefing, saying it is likely that Singapore will not be able to meet the criteria for it to go ahead.
This would be the second postponement of the travel bubble, after it was deferred last November following a spike in infections in Hong Kong.
The news sent the shares of Singapore Airlines skidding, with the stock closing down 5.7 per cent at $4.50, with 28 million shares traded. Ground-handler and in-flight caterer Sats lost 3.9 per cent to close at $3.69.
Shares of supermarket chain Sheng Siong, however, jumped by 10.7 per cent to $1.66, as long supermarket queues made their reappearance islandwide.
Mr Yu Liuqing, country analyst at The Economist Intelligence Unit (EIU) said that tightened social restrictions will effectively freeze the recovery of private consumption in the short term.
However, he noted, disruption to businesses will be less pronounced than last year's circuit breaker period as businesses have adapted to working from home and will continue to support to the overall economic recovery.
"Singapore's economic growth will not see another contraction unless the circuit breaker is reactivated for a prolonged period of time," Mr Yu said.
Strong contact tracing capacity will help the authorities to stop the spread quickly, and the vaccination programme will lead to the restrictions being removed soon enough, he added.
Speaking at a virtual press conference, Education Minister Lawrence Wong, who is also the MTF co-chair, said: "I think the businesses that will be the hardest hit will be the food and beverage (F&B) sector, because of the restriction for dining in."
In view of this, the Government will raise its wage support for F&B establishments to 50 per cent, up from 10 per cent, under the Jobs Support Scheme (JSS). This will apply to the first $4,600 of gross monthly wages paid to local employees. The increase in support will be applicable during the period for which dining in is prohibited.
To support hawkers and coffeeshop stallholders, who are self-employed and do not benefit from the JSS, the Government will provide one month of rental waiver for hawker stall and coffeeshop tenants of Government agencies.
Mr Wong urged commercial landlords to support their F&B tenants.
READ NEXT: What are the new Covid-19 rules in S'pore from May 16?