STI sheds 0.05% as investors turn cautious amid GDP plunge

THE Straits Times Index (STI) fell 1.36 points or 0.05 per cent to close at 2,544.15 as investor optimism waned after Singapore reported its worst-ever economic performance for the second quarter.

Forecasters from the Ministry of Trade and Industry (MTI) were prompted to tighten their projection for the state after its quarterly gross domestic product (GDP) declined by 13.2 per cent in April through June. They are now bracing for a contraction of between 5 per cent and 7 per cent, compared with 4 per cent and 7 per cent previously.

HSBC economist Yun Liu noted that Singapore activity fell at a "record pace" with broad-based weakness in all sectors, reflecting the significant impact of the two-month lockdown. Yet, she believes the worst is over. She said: "While Singapore has been hard hit, we think the economy has likely hit the trough and will gradually bottom out in Q3."