Singapore stocks weighed down by inflation, supply chain fears

Investors entered the weekend on a low note, with shares finishing in the red as inflationary pressures and supply chain disruptions continue to weigh on sentiment.

The sombre mood left the Straits Times Index (STI) down 0.14 per cent or 4.68 points at 3,232.34, with losers outpacing gainers 239 to 222 as 1.69 billion shares worth $1.02 billion changed hands.

"Inflation risks remain front and centre. The numbers in the United States have pushed even higher of late, and the Fed's on the move," said HSBC co-head of Asian economics research Frederic Neumann, referring to the Federal Reserve.

"The surge in fossil fuel prices will inevitably drive headline prints up in the coming months. At the same time, global food prices have increased to close to a record," he added.

Mr Neumann said it is no surprise investors are starting to worry about a burst in inflation across Asia.

UOB noted that the Restaurant Association of Singapore had already warned that food and beverage players are facing cost pressures due to labour shortages, higher energy prices and supply chain disruptions. "Business margins are squeezed, and there could be more cost pass-through to consumers in the future," it said.

Elsewhere in the region, key benchmarks were buoyed by optimism over pandemic recovery and have temporarily shrugged off inflation woes. The exception was Hong Kong's Hang Seng Index, which shed 1.07 per cent after Alibaba's shares sank 10.7 per cent.

The Kuala Lumpur Composite Index was up 0.11 per cent.

Hongkong Land was the STI's biggest gainer, advancing 1.1 per cent to US$5.78.

Yangzijiang Shipbuilding, which declined 1.6 per cent to $1.26, was at the bottom of the table. It was also the most heavily traded counter on the blue-chip index, with 23.7 million shares changing hands.