STI skids on gloomy economic forecasts

Gloomy economic forecasts from here and around the world sent local shares sliding yesterday.

The sell-off left the benchmark Straits Times Index (STI) at 2,623.67, down 25.23 points or 0.95 per cent.

All but five of its 30 components closed lower while across the wider market, losers thumped gainers by 349 to 145. There were 1.49 billion shares worth $1.05 billion traded.

Genting Singapore was in the spotlight after its Resorts World Sentosa (RWS) announced it would be laying off a significant number of staff. The prospect of cost savings did nothing to lift investor sentiment, though.

RWS reopened to visitors early this month, but travel restrictions and safe distancing make it unlikely that business will improve quickly.

Genting Singapore ended the day at 76.5 cents, down 2.55 per cent. It was the worst-performing STI component stock for the day.

Monetary Authority of Singapore (MAS) managing director Ravi Me-non warned there is substantial uncertainty over the global economic outlook, and recovery will not come quickly. He added yesterday that MAS is in talks with the local banks on capital-management issues, which may include discussion over a restriction of dividend payments.

DBS ended down 1.28 per cent while OCBC Bank and United Overseas Bank each lost about 1 per cent.

Among the smaller caps, Top Glove had a tough day after the United States authorities barred the import of its products, possibly over a violation of labour rules. The stock ended at $6.49, down 11.1 per cent.

Other healthcare stocks that have charted strong gains in recent months were also weaker. UG Healthcare lost 14.3 per cent to $1.32, while Riverstone closed at $3, down 2.3 per cent, and Medtecs International dived 19.4 per cent to 52 cents.

Elsewhere, the International Monetary Fund warned that the rate of bankruptcy for small and medium-sized businesses across 17 countries that it has studied could triple to 12 per cent this year, versus 4 per cent before the pandemic.

Key markets around the region were also broadly softer yesterday.

In particular, Shanghai shares were down 4.5 per cent while the Hang Seng lost 2 per cent. South Korea's Kospi Index closed 0.82 per cent lower as the central bank kept rates unchanged. Japan was 0.76 per cent down and Australia ended flat.

"No matter how much stimulus and fiscal sugar you try to entice consumers with, they will not... go on a spending spree until they feel confident the landscape is virus-free," AxiCorp's chief global market strategist Stephen Innes told Agence France-Presse.