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Big swings see STI recover most of Friday's early losses, down 11% on the week

AS an indicator of the volatility that financial markets are currently facing, Singapore's Straits Times Index (STI) had a topsy turvy session to end a week where it - along with other regional equity benchmarks - clocked in their worst performances since 2008's global financial crisis.

With US markets having their niggest drops since the “Black Monday” stock market crash of 1987 on Thursday, sell-offs in Singapore were expected. The index's 5 per cent drop at the commencement of Friday trading was its largest decline at the open since October 2008. 

The STI fell by more than 6 per cent shortly after but managed to claw back most losses after the mid-day break to end 44.64 points or 1.7 per cent lower at 2,634. Twenty five of the STI's 30 constituents closed in the red.

Singapore Exchange market strategist Geoff Howie noted: "The current bout of STI volatility currently matches what we saw from January to October 2011 amidst the EU debt concerns where the index declined 23 per cent and then recovered 37 per cent." 

This week, the blue-chip index plunged 326.98 points or 11 per cent from March 6's close of 2,960.98.

The intraday recovery came on the back of reports of a Canadian pharmaceutical firm claiming to have found a cure for Covid-19, news that the US Congress is said to be nearing a stimulus deal with the White House, and of course bargain hunters were at play too.

Lending additional weight to the better mood was the roll-out of an unscheduled bond-buying plan by the Bank of Japan, along with a liquidity injection. Australia also announced fiscal stimulus measures on Friday.

Of the Asia-Pacific benchmarks, Australia’s ASX 200 had its wildest trading day on record. It fell by as much as 8 per cent before climbing towards the end of trading to finish 4.4 per cent higher. Elsewhere, China, Japan, Hong Kong, Malaysia, South Korea and Taiwan retracked most of their opening losses but still closed lower.

Gold continued to dip during Asian trade. "De-risking/leveraging sees investors selling bullion to pay for losses in stocks, and that is currently outweighing it as a safe-haven hedge," said AxiCorp chief markets strategist Stephen Innes.

STI counters sensitive to prices movements of oil - West Texas Intermediate and Brent were up - such as conglomerates Keppel Corp and Sembcorp Industries were among gainers. Keppel closed S$0.12 or 2.3 per cent up at S$5.27. Meanwhile Sembcorp, which came off a 15-year low on Thursday, finished S$0.06 or 3.8 per cent higher at S$1.64.

The local banks recovered most early losses. OCBC Bank fell S$0.04 or 0.4 per cent to S$9.07 and United Overseas Bank S$0.39 or 1.9 per cent down at S$20.14. DBS performed least well of the lot, ending at S$19.35, down S$0.85 or 4.2 per cent . The trio are trading at price levels last seen in 2017.

Last week's outperformers, the Singapore real estate investment trusts (Reits), were broadly lower with the iEdge S-REIT Index down 55.43 points or 4.2 per cent to 1,281.17.

Trading volume on the Singapore bourse stood at 2.91 billion securities while total turnover was S$3.45 billion. Decliners trumped advancers 430 to 137.

With most benchmarks in bear territory, markets could remain jittery.

"Against this background, bottom fishers would be better advised to avoid catching falling knives and wait for signs of stabilisation before dipping their toes back in the water," Jeffrey Halley, Oanda's Asia-Pacific senior market analyst cautioned.