STI erases gains from Monday session

Asian markets were hit by another wave of risk aversion yesterday, after concerns over global growth sparked a steep sell-off on Wall Street overnight.

Data pointing to slowing manufacturing and declining homebuilder sentiment in the US on Monday night sent US equity indexes tumbling to new lows.

The S&P 500 sank 2 per cent to 2,545.94, recording its lowest close for the year.

"Let last night's US economic data be a stark reminder the US economy is not immune to a slowdown," said Mr Stephen Innes, head of Asia-Pacific trading at Oanda.

"We had a great inclination for the rest of the world's economic woes, but if the US economy turns south, we are in for a world of hurt. After all, it was the US market that was carrying the weight of global risk sentiment on its shoulder."

Amid a light calendar, investors also looked to Chinese President Xi Jinping's speech on the 40th anniversary of China's economic reforms yesterday to calm risk sentiment.

Mr Xi called for his country to "stay the course" on its current path of reform and emphasised that "no one is in a position to dictate to the Chinese people what should or should not be done".

Unfortunately, investors were left wanting for more.

Mr Innes said: "Without question, he disappointed markets, but the bar was always high for a huge surprise. Just the same, the speech was little more than a history lesson with no new reforms or stimulus measures offered up and will do little to calm investor jitters."

Asian markets tumbled, with the Shanghai Composite losing 0.82 per cent and Hong Kong's Hang Seng shedding 1.05 per cent. Japan's Nikkei 225 fell 1.82 per cent while in South Korea, the Kospi slipped 0.43 per cent.

The bloodletting continued on Singapore's bourse. The Straits Times Index erased all gains from Monday's session, sliding 2.2 per cent or 68.71 points to 3,045.54 - its lowest level in a week.

The bourse saw about 1.14 billion shares worth $1.05 billion in total change hands, while losers outnumbered gainers 285 to 131.

All three banks finished firmly in the red. DBS Bank lost 1.63 per cent to $23.55; United Overseas Bank closed 2.49 per cent lower at $24.30, while OCBC Bank fell 1.68 per cent to $11.15.

Among the most heavily traded by volume, Singtel closed down 3.27 per cent at $2.96 with 28.5 million shares traded. Genting Singapore fell 1.5 per cent to 98.5 cents with 26.4 million shares traded.

Year to date, Genting Singapore's stock has shed about a quarter of its value since it began the year at $1.32.

But KGI Securities believes it can still pay attractive dividends while offering limited downside risk. It cites how Genting's current price-to-earnings and price-to-book valuations are below the 10-year average. Genting also offers a financial year 2018 forecast dividend yield of more than 3.5 per cent.

Investors now await the US Federal Reserve's monetary policy decision today, the only highlight for the markets this week.

The US central bank is widely expected to raise interest rates for the fourth and final time this year.

In particular, Fed chair Jerome Powell's comments during the Federal Open Market Committee meeting will be carefully parsed by global investors for clues of potential pullback in tightening.

But CMC analyst Margaret Yang noted that "nothing will change the fact that we are at the end of this ultra-low interest rate era, which means also the end of a credit expansion cycle".

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