Bulls And Bears

STI falls but post-election dip not expected to last

Regional markets up generally; analysts hopeful on recovery of global economy

Local shares ended on a muted note yesterday after last Friday's general election that left the ruling People's Action Party (PAP) with a smaller-than-expected margin of victory.

The benchmark Straits Times Index (STI) ended the day at 2,631.08, down 21.57 points or 0.81 per cent.

The biggest loser was City Developments, which closed 3.9 per cent lower at $8.37, after warning that pre-tax profit for the first half would be "substantially" lower than for the same period last year.

Other stocks that weighed on the STI were Thai Beverage, down 3.55 per cent; Sats, which dipped 3.47 per cent and ST Engineering, off 2.39 per cent.

Analysts are not expecting the post-election dip to last.

"Despite a decline in PAP's vote share, we expect any impact on the stock market to be temporary and insignificant, given our expectations of policy continuity in the near term," said OCBC Investment Research yesterday.

Premium seafood supplier Oceanus Group was among the counters that saw big price moves.

It ended at $0.008, up 33.3 per cent. The company said last week that it is now on a firmer footing, and has obtained its first clean audit opinion in nine years.

Willas-Array Electronics ended at 38 cents, up 65.2 per cent. Last week, it issued a positive profit alert, stating that earnings for the three months to June 30 would come in at about HK$6.5 million (S$1.16 million) versus a net loss of HK$24.6 million for the same period last year.

Key regional markets closed higher for the day.

Hong Kong's Hang Seng Index finished 0.17 per cent higher as hopes for a virus vaccine overshadowed concerns about a fresh wave of infections in the financial hub.

The Shanghai Composite climbed 1.77 per cent while the Shenzhen index jumped 3.48 per cent.

South Korea's Kospi closed 1.67 per cent higher, and Japan's Nikkei was up 2.22 per cent. The improved market sentiment came after United States biopharmaceutical firm Gilead Sciences said an analysis showed its antiviral remdesivir helped reduce the risk of death in severely ill Covid-19 patients.

The benchmark in Kuala Lumpur was up 0.92 per cent while Jakarta added 0.66 per cent.

Analysts said they were confident the global economy, which is expected to fall into recession this year, will continue to recover.

"We do think that the global economy is now entering a multi-year recovery, but there are going to be wobbles along the way," Ms Mary Nicola of PineBridge Investments told Bloomberg TV.

• Additional reporting by Agence France-Presse

A version of this article appeared in the print edition of The Straits Times on July 14, 2020, with the headline 'STI falls but post-election dip not expected to last'. Print Edition | Subscribe