Global economic worries stall STI gains

The spectre of slowing global economic growth returned to haunt markets yesterday, as slides in developed markets' sovereign bond yields continued to stoke recession fears.

The Singapore market experienced a near repeat of the previous day's performance, with the Straits Times Index erasing nearly all intraday gains to close just 5.19 points or 0.16 per cent higher at 3,203.58.

"The rapid and persistent decline in bond yields is unnerving investors about the economic outlook," Mr Jasper Lawler, head of research at London Capital Group, wrote in an afternoon note.

"Stocks have managed to steady, supported by expectations of accommodative policy from central banks and reports of progress in all areas of trade talks. However, details remain elusive and there is still no timetable in place for a deal."

On the Singapore bourse, a total of 1.08 billion securities worth $866.62 million changed hands, working out to a unit price of 80 cents. Losers outnumbered gainers 195 to 173.

Mr Ernest Lim, a remisier at CGS-CIMB, said markets are likely seeing lacklustre trading because most of the positive news or optimism has already been priced in. For instance, while Federal Reserve chair Jerome Powell surprised markets with his dovishness last week, it would be difficult to surprise the market with further dovishness in the near term.

Investors showed more interest in second liners yesterday, with penny stocks making up the top six by volume traded. QT Vascular led the way with 106.5 million shares traded before closing flat at 0.4 cent.

Remisier Charles Chua told The Business Times the high volume was probably on speculative trading and rumours of an ongoing acquisition by the medtech company, which specialises in balloon catheters.

Trailing behind were ISR Capital, which closed flat at 0.2 cent with 73.2 million shares traded, and JCG Investment, also unchanged at 0.2 cent on a volume of 45.6 million shares.

A day after the Urban Redevelopment Authority unveiled plans to further develop the areas of Jurong and the Greater Southern Waterfront, property developer CapitaLand continued to build on Wednesday's gains of 1.44 per cent - it picked up four cents or 1.14 per cent to $3.56 yesterday with 11.1 million shares traded.

Nomura research analyst Sai Min Chow noted in a Wednesday report that if CapitaLand's acquisition of Ascendas-Singbridge is approved and successfully completed, CapitaLand will be able to explore many opportunities for redevelopment and rejuvenation in the enlarged portfolio.

As the first quarter of this year comes to a close, regional markets have fared relatively well. UBS noted in its latest Chief Investment Office Asia Pacific investing guide yesterday that Asia excluding Japan equities rebounded 12 per cent in Q1 2019 after falling 9 per cent in Q4 2018.

However, the recovery may be short-lived. Attributing it partly to investor realisation that last year's slide in stock valuations was excessive, chief investment officer Mark Haefele and head of UBS' Apac investment office Tan Min Lan wrote: "The rally belies disappointing economic activity and softer inflation in Europe, the US-China trade spat, and downgrades to corporate earnings expectations, a disconnect that has made investors question the rally's durability."

They added: "Upside for risk assets now depends on a convincing turnaround in economic data and the earnings outlook, along with policymakers keeping financial conditions loose. A trade agreement that rolls back US tariffs on Chinese imports would also help."

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