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STI continues to fall on investor worries

This article is more than 12 months old

Sentiment further shaken by fears that China could use rare earths as a countermeasure to US tariffs

Local equities continued to slide after a Wall Street session where investors were jittery over the US economic outlook, with mounting tensions in the trade war and growth worries doing the market no favours as sentiment in Asia dented further.

Singapore's Straits Times Index (STI) closed at 3,143, down 20.28 points or 0.6 per cent.

At a press briefing yesterday, Chinese Vice-Foreign Minister Zhang Hanhui said that while Beijing was against a trade war, it was not afraid.

The already fragile investor sentiment was further shaken on the growing sense that China could use rare earths as a countermeasure to US tariffs.

Market participants were also concerned by implications of Singapore being placed on US currency watch list.

Like the local market, Australia, China, Hong Kong and Japan posted losses.

Elsewhere in the Asia-Pacific, Malaysia and South Korea finished higher.

Slipping 1.3 per cent to its lowest level since Jan 4 on Wednesday, South Korea's Kospi index rebounded, adding one per cent to 2,038.8.

"While some regional markets had edged higher alongside the relief, the likes of the trade-dependent Singapore market can be seen remaining under stress with the short-term impact from the prolonging of the trade impasse expected to be negative," IG market strategist Pan Jingyi said.

In Singapore, trading volume clocked in at 1.25 billion securities, just under the daily average in the first four months of 2019.

Total turnover came to $1.07 billion, 4.5 per cent above the January-to-April daily average.

Across the market, decliners outpaced advancers 207 to 146. With broad-based losses, the benchmark index had 21 of the STI's 30 components in the red.

"Investors seem to be retreating from cyclical sectors such as banking and property, and turning to defensive sectors such as telecommunications and transportation," Mr Brandon Leu, vice-president of equities and financial products at UOB Kay Hian, observed.


Singtel was the benchmark index's most traded stock, with 38.5 million shares changing hands.

The telco shares built on Wednesday's gains to add two cents or 0.6 per cent to $3.20.

Transport operator ComfortDelGro advanced three cents or 1.2 per cent to $2.47.

The banking trio was lower. DBS Group Holdings ended 25 cents or 1 per cent lower at $24.60, OCBC Bank dropped 15 cents or 1.4 per cent lower at $10.74 while United Overseas Bank closed at $23.89, falling 22 cents or 0.9 per cent.

Dairy Farm International shares dropped 19 US cents (26 Singapore cents) or 2.4 per cent to US$7.64.

Yesterday, RHB Research Institute, which has a target price of US$8.25, downgraded its recommendation on the pan-Asian retailer to "neutral" as the stock was trading close to its fair value.

With volatility and uncertainty over how the US-China trade impasse could unfold, markets could end the week either way, said market watchers.

"With sentiment quite fragile at the moment, lower gross domestic product or higher jobless claims (in the US) could spark another rush to the exit door for equities and oil.

"A better print is likely to consolidate rather than turn the tide of the recent sell-off," Oanda senior market analyst Jeffrey Halley said.

One trader was hopeful that the local market would end positively today.

"Even though the market dropped more than it did on Wednesday, there was less fear among investors.

"I believe the market hit rock bottom (yesterday) and a rebound is possible," the trader said yesterday.

Noting that the Singapore market was "somewhat oversold", another trader said that the market could rebound "on end of month window dressing activity".

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