Bulls And Bears

STI slips 1.7% as virus fears continue to fester

Dire warnings over possible death toll in US and spike in India cases spook investors

Singapore's Straits Times Index (STI) slipped yesterday as worries over rising coronavirus cases and the resulting economic damage continued to bug investors.

Overnight, United States President Donald Trump warned of a "very, very painful two weeks" for the US, as American deaths from the coronavirus could hit 240,000.

Fears are also mounting over a spike in infections in India.

The local benchmark opened 0.5 per cent lower, extending losses in the afternoon session to finish 40.96 points, or 1.65 per cent, lower at 2,440.27. All but three of its 30 constituents ended in the red.

Elsewhere in the Asia-Pacific, equity benchmarks in China, Hong Kong, Japan, Malaysia, South Korea and Taiwan registered losses.

Australia's ASX 200 continued to buck the trend, advancing 181.80 points, or 3.6 per cent, to 5,258.60.

Local banks were laggards on the STI, following an announcement by the Monetary Authority of Singapore aimed at helping individuals meet loan and insurance obligations, and supporting small and medium-sized enterprises with access to bank credit and insurance cover as well as providing ample liquidity during the virus-induced slowdown.

DBS dropped 2.3 per cent to $18.15, OCBC Bank fell 1.7 per cent to $8.49 and United Overseas Bank ended at $19.09, down 1.9 per cent.

Jefferies analyst Krishna Guha noted that, at worst, the measures could see revenues for the trio decline by 14 to 18 per cent in the current financial year. He added, however, that lower credit costs could cushion the impact, along with "comfort" around valuation, capital and ample liquidity.

Venture Corporation finished 3.1 per cent lower at $13.15. Nonetheless, DBS Group Research analyst Ling Lee Keng expects Venture to emerge stronger from the pandemic "due to its expertise, its strong relationship with customers as well as a healthy balance sheet".

Among STI counters, units in Ascendas Reit fell 0.7 per cent to $2.81 after the industrial property trust said on Tuesday that it had acquired a 25 per cent stake in Galaxis, a business park in one-north, for $102.9 million.

While the acquisition price of $963 per square foot is 12 to 13 per cent higher than that for the nearby Nexus@one-north and Solaris business parks, Citi Research analyst Brandon Lee described the premium as fair, given the allowable 30 per cent white component for the Galaxis site.

Across the Singapore market, decliners outpaced advancers 298 to 138, with 1.27 billion securities valued at $1.31 billion changing hands.

A version of this article appeared in the print edition of The Straits Times on April 02, 2020, with the headline 'STI slips 1.7% as virus fears continue to fester'. Print Edition | Subscribe