STI down on S'pore's grim economic showing

Local investors trod carefully after official figures outlining Singapore's worst quarterly economic performance landed with an almighty thud yesterday.

The dire numbers - growth fell 13.2 per cent between April and June - sent the Straits Times Index (STI) down 1.36 points, or 0.05 per cent, to end at 2,544.15, with prospects of more bad news ahead.

Ministry of Trade and Industry forecasters have tightened their projections for the country after the grim gross domestic product number. They are now braced for a contraction of between 5 per cent and 7 per cent for the full year, compared with the 4 per cent to 7 per cent estimate made earlier.

HSBC economist Yun Liu noted that activity in the three months to June 30 fell at a "record pace", with weakness in all sectors, reflecting the significant impact of the two-month circuit breaker measures.

But Ms Yun believes the worst is over. "While Singapore has been hard hit, we think the economy has likely hit the trough and will gradually bottom out in (the third quarter)."

Keppel Corp lost 11.11 per cent to close at $4.80 amid a sell-off after Temasek announced that it was pulling the plug on its $4.1 billion partial offer because the firm's $697.6 million net loss for its second financial quarter breached a key condition for the deal.

Sembcorp Industries dived 2.63 per cent to $1.85, despite shareholders voting overwhelmingly in favour of the proposed $2.1 billion recapitalisation of Sembcorp Marine as well as a demerger from each other that will result in Temasek having a direct stake in the marine arm.

Both counters experienced volatile price swings in the second half of the trading session amid mixed sentiments from investors.

Venture Corporation was the top gainer for the day, up 6.16 per cent to $20. It has raised its interim dividend to 25 cents a share from 20 cents, despite a 28.2 per cent fall in first-half net profit.

OCBC Research analysts have lifted net profit forecasts for the firm by 2.5 per cent for the 2020 financial year and 8.6 per cent for next year, saying the second quarter was a "turning point" for the group.

Aviation and aviation services-related stocks gained: Singapore Airlines rose 3.15 per cent, while Sats gained 1.85 per cent. Banks, too, were among the gainers: DBS Bank rose 1.21 per cent to $20.85, OCBC Bank inched up 0.46 per cent to $8.76 and United Overseas Bank climbed 0.36 per cent to $19.65.

Regional markets were mixed.

The KLSE slipped 0.44 per cent and the Shanghai Composite fell 1.15 per cent. Meanwhile, the Hang Seng Composite Index rose 1.25 per cent and the Nikkei added 1.88 per cent.