Most Asian markets end in red
Eyes on US-China meeting at G-20 summit this weekend
Last week's equity market rally has fizzled out, with investors taking to booking profits and sentiment dampened by a new round of US sanctions on Iran.
That said, the market's focus will now be this weekend's meeting between the US and China at the G-20 summit in Osaka.
With these factors in play, the Straits Times Index (STI) ended 7.26 points or 0.2 per cent lower at 3,304.27.
Most other markets in the region also ended in negative territory. Among the key Asia-Pacific markets, Australia, China, Hong Kong, Japan and South Korea ended lower. Malaysia closed flat.
Markets were given a lift on expectations of the US Federal Reserve's dovish stance and on the US and Chinese leaders agreeing to convene on the sidelines of the G-20 summit.
Observers noted that a July rate cut by the Fed has already been priced in. However, this weekend's meeting in Osaka should be viewed as a short-term market catalyst amid a global economic slowdown.
CMC Markets analyst Margaret Yang said: "The most likely outcome of the G-20 meeting is another trade truce with no further tariffs implemented and no meaningful deal reached - but they'll keep talking."
In Singapore, trading volume clocked in at 1.15 billion securities, 96 per cent of the daily average in the first five months of the year. Total turnover came to $1.16 billion, 11 per cent over the January-to-May daily average.
Across the market, decliners outpaced advancers 220 to 166. Fourteen of the STI's 30 components ended up in the red.
With other central banks following the Fed's accommodative stance, investors continued to pick up more real estate investment trusts (Reits).
For now, interest is showing few signs of abating, though in recent sessions, dealers have told The Business Times that valuations for most Reits are now high. Yesterday, UBS Global Wealth Management joined the chorus, saying in its report that local Reits are "beginning to look overpriced".
Buoyed by news that the revamped Funan mall has secured a 95 per cent take-up ahead of its opening on Friday, CapitaLand Mall Trust traded actively and closed four cent or 1.5 per cent higher at $2.64.
Financials extended Monday's dip. DBS Group Holdings closed 17 cents or 0.7 per cent lower at $25.60; OCBC Bank dipped three cents or 0.3 per cent to $11.25, while United Overseas Bank finished at $25.70, falling 16 cents or 0.6 per cent.
In a banking sector report yesterday, DBS Equity Research said valuations of OCBC and UOB "should be supported by strong capital levels and decent dividend yields amid benign credit environment".
UOB is DBS Equity Research's sector pick with a target price of $29.20. OCBC was downgraded to "hold" with a target price of $11.50 on "limited catalysts for the stock in the near-term".
The UBS report noted local banks, which have above-average dividend yields, are "starting to look more attractive".
With the stock rebound from the latter half of last week having lost steam, investors turned to the defensive telecommunications sector, which pulled in heavy interest in a risk-off May.
On 41.8 million shares traded, Singtel was the benchmark index's most traded stock, adding three cents or 0.9 per cent to $3.48. The other telco plays, Netlink NBN Trust (1.5 cents or 1.7 per cent higher at 89 cents) and StarHub (two cents or 1.3 per cent up at $1.55) also gained.
A Singapore Exchange (SGX) market insights report yesterday showed that telcos were the top net buy sector in May, attracting institutional inflows of $135.8 million. In the year up to June 21, the three telco players averaged a total return of 9 per cent, SGX said.
For full listings of SGX prices, goto https://www2.sgx.com
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