Singapore stocks tumble 1.6% as global headwinds dent sentiment

SINGAPORE shares had little to no chance for an upside on Friday as worries ratcheted up over a slowing China, the Russia-Ukraine war, inflation shock, rising rates, as well as talk of a potential recession in Europe.

The Straits Times Index tumbled 51.68 points or 1.55 per cent to 3,291.89. Week on week, the bourse shed 65 points or nearly 2 per cent, having recorded losses every day since Wednesday on a shortened trading week.

Major Asian equity gauges, except for Japan which finished 0.7 per cent higher on its return from a three-day holiday, posted steep losses.

This followed an overnight sell-off on Wall Street as investors fretted over the aggressive US rate hike, which was an about-turn from the post-FOMC (Federal Open Market Committee) relief rally the day before.

"The market narrative is fickle, and traders are now suddenly thinking that the Fed might not be taking the inflation shock seriously enough, implying a possible last-minute change of mind to go for a 75 basis point hike in the upcoming meetings. Whatever the case, the direction of interest rates is up and with US Treasury yields breaking past 3 per cent, the information technology wreck resumed," remarked Kelly Chia, Julius Baer's equity research analyst for Asia.

Latest data indicating a slowdown in China as it doubles down on its zero-Covid stance and the Bank of England's downbeat assessment of the UK's economic outlook also fuelled worries over the health of the global economy.

Chia added that markets in Asia have largely been coupled with the Western markets, "barring a few hiding spots". Asean as a region has been recording inflows, contrary to the rest of Asia, and is trading at a premium to its 5-year average price earnings multiples.

"Singapore’s and Indonesia’s indices have held up well so far, largely due to their heavyweights in quality financials. For Singapore, there is also a reopening play, where property proxies like Reits (real estate investment trusts) give investors a reasonable yield but with upside optionality. In terms of valuations, the rest of Asia, including Japan and China, is trading below its five-year price earnings averages. However, without an improvement in macroeconomic sentiment, we see little catalysts," she said.

In what has been a busy week as far as monetary policy goes, major central banks across the board have expressed a hawkish tone amid elevated inflation. Even so, Federated Hermes senior economist Silvia Dall’Angelo pointed out that central banks are at different stages of their journeys, and are likely to proceed at very different speeds.

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Turnover on the local bourse stood at 1.60 billion securities worth S$1.53 billion. Losers outpaced gainers with 348 counters down and 154 up. Losses in the key index were led by banking trio DBS , OCBC and UOB as well as Jardine Matheson Holdings .

AEM Holdings closed unchanged at S$4.84. The mainboard-listed electronics provider reported an over three-fold jump in Q1 net profit to S$41 million on the back of record quarterly revenue. SIA Engineering Co (SIAEC) fell S$0.05 or 1.88 per cent to S$2.61. The maintenance arm of Singapore Airlines reported a rebound in second-half earnings ended Mar 31 on a writeback of associates’ tax provisions. The board warned of risks to its business outlook despite early signs of recovery as SIAEC was still ringing up operating losses, with its full-year bottom line sustained only by “substantial government wage support”.