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S'pore market cap falls 5.1% in May as investors grow cautious

More downside expected in June, given the weak 2Q macroeconomic data and ongoing trade tensions

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Singapore's stock market performance worsened in May, with total market capitalisation falling 5.1 per cent per cent from the previous month to end at S$903.7 billion, as investors grew cautious in the face of worsening trade tensions between the United States and China.

Singapore

SINGAPORE'S stock market performance worsened in May, with total market capitalisation falling 5.1 per cent per cent from the previous month to end at S$903.7 billion, as investors grew cautious in the face of worsening trade tensions between the United States and China.

Across 731 stocks listed on the Singapore Exchange Mainboard and Catalist boards, losers outnumbered gainers 425 to 137.

Blue-chip stocks were harder hit, with the total market cap of Straits Times Index (STI) constituents falling 6.6 per cent to S$552.8 billion.

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After topping the table of biggest gainers in April, local banks became the top losers by dollar value in May. DBS Group was down S$10.1 billion or 14 per cent, followed by UOB losing S$7.28 billion (-15.6 per cent) and OCBC Bank losing S$6.51 billion (-12.6 per cent). This was despite OCBC and UOB beating market estimates with strong first quarter results early in May. UOB net profit rose 8 per cent to S$1.05 billion, while OCBC's net profit was up 11 per cent at S$1.23 billion.

Other top losers included Wilmar International (-S$2.24 billion), Genting Singapore (-S$1.41 billion), Keppel Corporation (-S$1.35 billion) and CapitaLand (-S$1.33 billion).

"I think the one thing that investors have come to realise is that the current trade uncertainties between US and China are unlikely to be resolved any time soon," said DBS analyst Yeo Kee Yan. "Investors are fearful of an economic slowdown. That's why all the cyclical stocks are falling," he added, noting that besides the banks, property, oil and gas, and airline stocks have also done poorly.

"The ones that are doing well are the staples," he added: safe-haven stocks with constant earnings, such as public transport or telecommunications players. "This is a clear sign that investors are fearful that the economic slowdown may get worse."

Singtel was May's second top gainer, adding S$489.8 million or 0.9 per cent to end the month with a market value of S$52.25 billion. Transport, storage and communications was also one of the less-hit sectors, losing S$1.3 billion or 1.5 per cent in market cap.

Mainboard companies' combined market cap fell 5.1 per cent to S$893.9 billion, while the Catalist market cap fell 6.6 per cent to S$9.7 billion. All industries saw losses, with the largest losers mining and quarry (-11.1 per cent), agriculture (-10.4 per cent), and finance (-8.4 per cent).

Among the various sectors, real estate investment trusts (Reits) performed the best, slipping a marginal 0.1 per cent compared with April. Reits took six spots on the list of top 10 gainers by dollar value in May, led by Frasers Centrepoint Trust, which gained S$408 million or 15.9 per cent.

In a report on May 27, SGX Research noted that reflecting increased investor participation, the combined average daily turnover for the 10 largest Reits has increased 31.1 per cent to S$161.2 million for the 2019 year-to-date, compared with S$122.9 million in the calendar year 2018.

KGI Securities' head of research Joel Ng sees more downside ahead in June, given weak second quarter macroeconomic data and continued bad news about trade tensions.

"Even though it's already fallen quite a bit this month, we're not out of the woods yet," he said.

The key event to watch is the upcoming G20 meeting at the end of June, he added, noting that then is also when the Trump administration is expected to have reached a decision about further tariffs on Chinese imports.