Bulls And Bears

STI overturns early losses, ends 0.5% higher

Oil price-sensitive counters rise; S-Reits continue decline in face of headwinds

Singapore's Straits Times Index (STI) finished strongly yesterday, as investors weighed the rising Covid-19 infections in the West and the growing sense that the worst might be over for Asia.

Equities found some support in higher oil prices, which were up on hopes that a price war between Saudi Arabia and Russia can be resolved. Oil prices were also lifted by news that China may add more black gold to its state reserves.

The STI traded more than 1.5 per cent lower in the early session, but clawed back those losses after a strong opening in Europe and the futures market pointed to a positive opening in the United States. The blue-chip index closed 0.5 per cent higher at 2,453.03, with 14 of its 30 constituents ending in the red.

Elsewhere in the Asia-Pacific, equity benchmarks were mixed. China, Hong Kong, Malaysia and South Korea registered gains. On the other hand, Australia, Japan and Taiwan were lower.

STI counters sensitive to the price movements of oil were up. Keppel Corp added 4.2 per cent to reach $5.51, and Sembcorp Industries gained two cents or 1.3 per cent to reach $1.55.

Among telcos, Singtel shares continued to outperform the market, advancing 4 per cent to $2.62. Singtel's stock has jumped 8.2 per cent since reports emerged that Australian unit Optus could be selling its tower portfolio for A$2 billion (S$1.74 billion).

Meanwhile, telco infrastructure play NetLink NBN Trust added 2.3 per cent to hit $0.90.

Singapore real estate investment trusts (S-Reits) continued to decline, with the iEdge S-Reit Index ending 37.29 points or 3.4 per cent lower at 1,057.58.

Yesterday, DBS Group Research lowered its recommendations for some retail-focused S-Reits, given that they face headwinds from lower foot traffic and a Bill that provides temporary relief to tenants on rental obligations for up to six months because of the coronavirus situation.

DBS analysts Derek Tan and Rachel Tan wrote that Reit managers are likely to focus on conserving cash. This could see payout ratios fall from 100 per cent to 90 per cent for most retail S-Reits, and distributions to unit holders lowered by 14 per cent to 27 per cent, due to rental rebates for tenants.

Across the Singapore market, advancers outpaced decliners 229 to 210, with 1.49 billion securities valued at $1.56 billion changing hands.

Today, investors in Asia are likely to keep a lookout for last month's manufacturing data from China, Japan, Australia and Singapore.

A version of this article appeared in the print edition of The Straits Times on April 03, 2020, with the headline 'STI overturns early losses, ends 0.5% higher'. Print Edition | Subscribe