Singapore shares fall amid rising US Treasury yields; STI down 0.8%
Yong Jun Yuan
SINGAPORE shares continued their fourth straight session of declines on Monday (Oct 23) as US 10-year Treasury yields continued to hover near 5 per cent.
The Straits Times Index (STI) shed 0.8 per cent or 23.33 points to close at 3,053.36. Across the broader market, losers beat gainers 269 to 124 after 1.1 billion securities worth S$835.4 million changed hands.
Major regional indices were also in the red, with both South Korea’s Kospi and Japan’s Nikkei 225 index shedding 0.8 per cent. Hong Kong’s bourse was closed to mark the Chung Yeung Festival.
SPI Asset Management managing partner Stephen Innes said that investors may be concerned about the trajectory of US Treasury yields, as well as its impact on equities.
“As long-term real rates rise, stocks could struggle mightily.
“Higher reals increase the discount rate applied to future cash flows, leading to lower present values for these cash flows and potentially affecting every asset class we price, except oil, which deals in the present,” he said.
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Innes added that it is not just the level of rates that matters but the pace at which rates have risen, as rapid rate rises can disrupt various asset classes and market sentiment.
On the STI, Frasers Logistics and Commercial Trust was the top gainer, rising 1 per cent or S$0.01 to S$1.02.
Meanwhile, Seatrium was at the bottom of the table, shedding 4.3 per cent or S$0.005 to S$0.112.
The trio of banks also closed in the red on Monday. DBS closed down 0.2 per cent or S$0.07 at S$33.01, while UOB fell 0.5 per cent or S$0.14 to S$27.62 and OCBC declined 0.6 per cent or S$0.08 to S$12.71.
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