Singapore stocks drop, SIA takes a beating
SINGAPORE shares continued south on Thursday after the US Federal Reserve chairman Jerome Powell warned that the economic outlook was uncertain and downside risks remained significant.
The Straits Times Index (STI), which opened at 2,546.64, settled at 2,522.31, down 49.70 points or 1.93 per cent from Wednesday. There were 137 gainers to 322 losers. A total of 1.75 billion securities, worth S$1.45 billion, changed hands.
"Risk aversion remains strong for the local market, seeing the STI fall in tandem with Asia markets and US futures on Thursday. This comes as Powell and the World Health Organisation issued bleak warnings amid the global health crisis,'' Jingyi Pan, market strategist at IG, told The Business Times.
Ms Pan added that the resurfacing of Covid-19 cases in countries such as Germany and South Korea had also gnawed away at optimism seen earlier in the week.
Industrials were the worst hit, followed by the consumer, financial, utilities and telecommunications sectors.
The STI, which had been range bound between 2,500 and 2,630 over the past month, is supported at 2,500 in the near-term, with resistance pegged at 2,600 and 2,630, Ms Pan said.
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Singapore Airlines (SIA) took a beating as analysts downgraded the stock ahead of its full year results. It closed at S$3.81, down 19 Singapore cents, or 4.75 per cent.
Nomura cut its SIA target to S$3.80, from S$4.34, forecasting substantial losses of S$1.6 billion for FY2021 ending March. Citi Research, too, has downgraded SIA to a "sell" from a "buy" on the dilutive impact to shareholders following the airline's massive fund raising exercise. The US research house expects continued losses in FY2021 and depressed return on equity to weigh on the stock.
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