STI falls 0.2% on Friday, capping a brutal week of losses

SINGAPORE stocks slinked off to the Christmas weekend with nary a sliver of optimism in sight as worries of slowing global growth, the US central bank's rate hike and an impending US government shutdown crashed headlong.

Rounding off a week of losses mostly, the Straits Times Index fell 0.2 per cent or 4.58 points to 3,046.04 on Friday, about 1 per cent lower than last Friday's close of 3,077.09.

Hopes of a possible Santa Clause rally were thoroughly crushed mid-week, thanks to the US Federal Reserve's less dovish than expected policy statement. To add salt to wound, investors also had to contend with the threat of a US government shutdown after President Donald Trump hardened his demands in the showdown with Congress over funding. Weary US equities extended losses for six consecutive trading days overnight.

Stocks in Asia also ended the week broadly lower, a sign investors are continuing to shift funds out of risky assets such as equities and being more content to wait and see, according to market watchers.

Olivier d'Assier, head of APAC research at Axioma, said: "Volatility is more than twice what it was earlier in the year, so has your return forecast for next year doubled in the last few weeks? If not, then there is no excuse for holding on to negative risk-adjusted returns, is there?"

He quipped: "Safest place for your money over Christmas is under your mattress, provided you stay home for Christmas and have a big dog!"

Losers outnumbered gainers 235 to 147 in Singapore, on a turnover of about 1.31 billion shares worth S$1.27 billion.

Tech stocks pointed lower, with the sector's largest stock, Venture Corp, down 1.13 per cent to S$13.98. Hi-P, which makes plastic and metal parts for Apple, pared 0.54 per cent to S$0.925, while consumer electronic manufacturer Creative Technology sank 4.84 per cent to S$4.92.

Global oil prices continued their downward spiral over oversupply fears, exerting pressure on the local energy and offshore marine stocks. Sembcorp Marine fell 1.92 per cent to S$1.53, while Sembcorp Industries declined 1.18 per cent to S$2.51. Offshore marine player Nam Cheong shed over 14 per cent to S$0.006.

But banks, with their exposure to the energy and offshore marine sectors, largely held their nerve. DBS was up 0.21 per cent to S$23.45, and UOB put on 0.17 per cent to S$24.35. Only OCBC retreated 0.09 per cent to S$11.07.

CMC analyst Margaret Yang believed "relatively reasonable valuations and high dividend yields" will likely cushion the downside for banks. In addition, rising interest rates will support the lenders' net interest margins and offset the slowdown in other non-interest income items, she said.

Overall, with the current flight-to-safety mood, Axioma's Mr d'Assier commented that it will take "quite a lot of good news" to see investors come out of hiding.

"They will certainly not be fooled by possibly still good earnings reports for 2018 in Q1 2019, which they will see in a very sceptical light as probably not repeatable in 2019," he said.