STI continues slide, falls 1.7% on Tuesday

Singapore's Straits Times Index (STI) continued on the downtrend on Tuesday in a mixed session in Asia after Wall Street's record plunge, as support measures failed to calm investors who are increasingly worried over the economic strain brought about by Covid-19.

The STI opened 0.4 per cent lower but had a short-lived spike in the early morning session, following a rebound in US futures. The blue-chip index eventually closed 41.24 points or 1.7 per cent lower at 2,454.53. Eight of the STI's 30 components ended the day in the red.

At current levels, the STI remains in bear territory, down 28.1 per cent from its 52-week high of 3,415.18, reached during intraday trading on April 29, 2019.

In the near term, hopes of a sustained recovery in equities remain bleak.

"Until we see a shock-and-awe fiscal package from the US that backstops the economy - and that's not a given at all - it is impossible to make a recovery case for equities," Oanda Asia-Pacific senior market analyst Jeffrey Halley told The Business Times.

Jean-Louis Nakamura, the Asia-Pacific chief investment officer at Lombard Odier, believes "the worst for markets may be behind us, at least in terms of extreme dislocations", but conditions for a sustainable rebound have yet to be reached.

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Mr Nakamura said: "The number of unknowns remain just too high, starting first with the pace at which the number of cases will continue to spike in Europe and will take off in North America, as well as the length of the period before reaching the peak of contamination in both regions."

Among the gainers on the STI was Yangzijiang Shipbuilding, which edged up S$0.01 or 1.3 per cent to S$0.81, after it secured a US$1.15 billion contract to build up to 10 vessels. Yangzijiang said the deal will see its yards utilised at a healthy rate and aid in providing a stable income stream for at least the next two years.

Shares in Singapore's bellwhether banking trio continued to slide. DBS dropped S$0.58 or 3.1 per cent to S$18, OCBC Bank finished S$0.09 or 1 per cent lower at S$8.61, and United Overseas Bank ended the day at S$19.39, dipping S$0.06 or 0.3 per cent.

DBS Group Research on Tuesday cut its target prices for OCBC and UOB on heightened credit costs and margin pressures amid the Covid-19 outbreak, following the US Federal Reserve's largest rate cut since 2008's Global Financial Crisis. The research house has a price target of S$8.60 for OCBC and S$19.00 for UOB. 

Real estate investment trusts (Reits) continued to be among the biggest laggards on the STI. Ascendas Reit dropped S$0.16 or 5.8 per cent to close at S$2.60. Meanwhile, Mapletree Logistics Trust fell S$0.08 or 5.5 per cent lower to S$1.37.

On Tuesday, the iEdge S-Reit Index, which tracks all property trusts listed in Singapore, fell 64.22 points or 5.6 per cent to 1,087.88.

Despite recent sell-offs, Maybank Kim Eng analyst Chua Su Tye remains positive on the asset class, which could see increases in distributions to unitholders as borrowing costs fall.

Elsewhere in the Asia-Pacific, equity benchmarks in China, Malaysia, South Korea and Taiwan were lower. 

Meanwhile, Australia, Hong Kong and Japan notched up gains. Of the lot, Australia's ASX 200 performed best, advancing 291.40 points or 5.8 per cent to 5,293.40 after a cash injection by its central bank, which promises further stimulus measures on Thursday.