Rumours of ECB's plans to end monetary stimulus hit markets
BANKS and the Jardine stable of companies led Singapore's stock market retreat on Friday, as the benchmark Straits Times Index (STI) fell 36.71 points, or 1.06 per cent, to finish at 3,436.37.
Regional markets were a similar sea of red from Japan to Hong Kong, Taiwan, India and Malaysia.
On the local bourse, some two billion shares worth S$1.1 billion were traded. Losers outpaced gainers 264 to 151.
Banks led the fall, with OCBC down 26 Singapore cents or 2 per cent to S$12.58; United Overseas Bank down 54 Singapore cents or 1.9 per cent to S$28.02; and DBS Bank down 30 Singapore cents or one per cent to S$28.50.
Shares of Jardine Cycle & Carriage likewise slumped by 48 Singapore cents or 1.4 per cent to S$34.52, while those of Jardine Matheson lost 28 US cents or 0.4 per cent to US$62.41.
Some stocks also suffered on negative news. For instance, ComfortDelgro lost six Singapore cents or 2.4 per cent to S$2.40, as OCBC Investment Research downgraded its call to "hold", while awaiting more clarity about the taxi operator's plans to enter the private hire car space, with new competitors also looking to crack the monopoly held by Grab since Uber's departure from the market.
Overall, the STI has risen a mere 0.3 per cent across the entire week. On Friday's performance, industry watchers said that it could be due to recent rumours that the European Central Bank (ECB) might be preparing to withdraw its quantitative easing programme.
In a Bloomberg survey of economists, almost a third of respondents predicted that the ECB president will set an end-date for purchases after next week's gathering of the Governing Council, and 46 per cent said that he would do so at the July session.
When asked what has been dragging the local market down, a remisier told The Business Times that it was probably these rumours about the ECB putting an end to its bond-buying programme, and added: "The trade war talks are still going on, but until you get real specifics, I don't think the market knows how to react. The other thing is the World Cup. It's actually true, every World Cup, it is like that. Volumes die down as brokers and clients shift their attention, and punters shift their funds too."
Meanwhile, the industry expects little market impact from the G-7 meeting that will be conducted over the weekend. Freddy Lim, chief investment officer at StashAway, an automated digital wealth manager, said: "This will be tense but expect little market impact."
"Trump is likely to be confronted by the other six leaders in the G-7 summit. Major allies of the US have already expressed anger and frustrations with the Trump administration, with particularly strong criticism from France and Canada. Although some countries such as France would not sign the communique, we do not see the G-7 meeting as having a big impact on market directions." This is because many countries have threatened retaliation on US tariffs, yet the markets had brushed them aside and continued to make new highs, he said.
"A positive meeting would also be seen as encouragement for the stock markets to continue nudging higher."
