STI sinks 1.5% as Asian markets tumble

SINGAPORE stocks slipped lower on Wednesday (Aug 2), amid broad selling across the region, after ratings agency Fitch downgraded the credit rating of the US.

The benchmark Straits Times Index (STI) fell 1.5 per cent or 48.77 points to close at 3,325.02.

Shares of Singtel, which were trading ex-dividend, led the decliners on the STI, after sinking 6.8 per cent to S$2.46. Other counters that also saw heavy selling include Sats, which slid 3.2 per cent to S$2.73, and DFI Retail Group, which was down 2.3 per cent to US$2.58.

Just one STI counter ended the day higher. Yangzijiang Shipbuilding was the top gainer on the index after climbing 1.3 per cent to S$1.57.

Across the broader Singapore market, losers outnumbered gainers 420 to 218 after 1.6 billion securities worth S$1.3 billion were traded.

DBS was the most active counter by value. The shares fell 1.6 per cent to S$33.84 after 4.1 million shares worth S$137.8 million were traded. The other local banks also ended in the red, with OCBC shares falling 1 per cent to S$13.19, and UOB ending 0.8 per cent lower at S$29.92.

Elsewhere in the region, key indices in Australia, Japan, Hong Kong and South Korea tumbled between 1.3 per cent and 2.5 per cent, with investor sentiment hit by reports that Fitch had downgraded the US’ credit rating to “AA+” from “AAA”.

Stephen Innes, managing partner at SPI Asset Management, noted that the downgrade could negatively affect various funding pipelines, such as mortgage rates and global swaps contracts.

“While debt downgrades seldom – if ever – have long legs, investors may pause and let the dust settle before re-entering risk markets,” he said.

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“However, within this super market-friendly environment of stable growth and a Fed close to the end of its hiking cycle creating fertile ground for stock gains, it’s unlikely risk sentiment will wander too far off the soft landing path.”