STI tumbles 1.3% on weak export data, Wall Street’s overnight losses

SINGAPORE shares had nowhere to go but down on Wednesday (May 17), following Wall Street’s overnight losses and the release of weak export data, which raised the risk of a technical recession for Singapore’s economy in the second quarter of 2023.

The key Straits Times Index (STI) tumbled 40.2 points or 1.3 per cent to 3,173.84, after US stocks retreated on the back of mixed economic data, weak corporate results and the ongoing debt-ceiling negotiations in Washington.

On the local bourse, some 1.3 billion units worth S$1.3 billion were traded. Losers outnumbered gainers, with 341 counters down and 227 up.

Key gauges across the region fared mixed: Japan, South Korea, Malaysia and Taiwan posted gains, while falls were recorded in Hong Kong, China and Australia.

Singapore’s non-oil domestic exports extended their decline in April for the seventh straight month, as exports to China – one of its largest trading partners – contracted sharply. Analysts warn that Singapore may slip into a technical recession if the boost from China’s reopening fails to materialise in Q2 2023.

This would exert more downward pressure on the STI in the second half of the year, said Kelvin Wong, Oanda senior market analyst for the Asia-Pacific. He added that the index has underperformed the rest of the world.

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For a six-month rolling performance as at May 16, he pointed out that the STI had fallen 3 per cent, compared with the gains in the MSCI All-Country World Index (+5.3 per cent), MSCI Emerging Markets Asia (+3.3 per cent), MSCI All-Country Asia ex-Japan (+3.1 per cent), and MSCI Emerging Markets ex-China (+0.8 per cent).

Technically speaking, the STI had traded below its key 200-day moving average for five consecutive days as at Tuesday, with resistance at around 3,255. The intermediate support to watch stands at 3,090, followed by the major range support of 3,040, he added.

CapitaLand Ascendas Reit : A17U 0% (Clar) was the day’s third-most active counter, with 43.9 million shares exchanging hands. On Wednesday morning, before trading on the counter resumed after a halt the previous day, it was announced that Clar had closed its private placement at S$2.727 apiece to raise gross proceeds of S$500 million. The fundraising will be used to partially fund its acquisition of Seagate’s facility and to repay debt. The units fell S$0.10 or 3.5 per cent to S$2.78.

RHB Research said that while the equity fundraising may act as a slight overhang on Clar’s units in the current challenging market, its balance sheet will be stronger, with an overall lower gearing of 37.6 per cent. The house has a “buy” rating on the Reit, with a target price of S$3.25.

Singapore Airlines : C6L 0% gained S$0.09 or 1.5 per cent to S$6.01. The airline reported a net profit of S$1.23 billion for H2 FY2023, led by strong demand for air travel. This enabled the group to post a net profit of S$2.2 billion for the full year – a record in its 76-year history – versus last year’s loss of S$962 million.