Nerves frayed by Russian shelling of nuclear plant in Ukraine sends STI down 0.8%

SINGAPORE shares fell as the volume turned up on market jitters over the war in eastern Europe, which reached a new level on Friday as Russian forces shelled and then seized Europe's largest nuclear power plant in Ukraine.

The key Straits Times Index (STI) tumbled 26.87 points or 0.83 per cent to 3,226.78 on Friday (Mar 4). The STI, which had a roller coaster ride all week, has lost 68 points or 2 per cent over the week.

Major equity gauges in the region from Japan, Hong Kong and China to Australia, South Korea and Malaysia plunged between 0.6 and 2.5 per cent as fear turned palpable of a further escalation of the Russia-Ukraine military conflict into a grander scale.

Russia's invasion of Ukraine hogged the spotlight for much of this week. As the humanitarian crisis worsened, traders also grappled with the ripple effects of the war on the global economy, which is still recovering from the pandemic, as well as rising inflation risks and tightening monetary policies.

OANDA's senior market analyst Jeffrey Halley said: "With Ukraine dominating markets in Asia, there's no point in talking about anything else really, except for China's Two Sessions, which starts today, and the US non-farm payrolls this evening." China's Two Sessions is an annual event when thousands of Chinese political elite converge to discuss the government's plans and priorities for the country's development.

Turnover on the local bourse came in at 1.70 billion units worth S$1.66 billion. Losers outpaced gainers with 310 counters down and 191, up.

Oil prices remained volatile as crude benchmarks Brent and West Texas Intermediate (WTI) remained at multi-year highs - above the US$100-a-barrel level and double the prices two years ago - as the war has sparked fears of an energy supply shock.

"This is likely to leave its mark on economic growth. In the past, a doubling of the oil price within two years has repeatedly led to a recession," warned Allianz Global Investors head of global economics and strategy Stefan Hofrichter in a report. He said he doubted that central banks, especially the US Federal Reserve, will postpone or even stop the announced normalisation of monetary policy, given the inflation outlook.

"Against this backdrop, we remain cautious on equities for the time being. The markets have enjoyed years of solid performance, and the Ukraine crisis may spur additional sell-offs over the coming weeks," he added.

Oil and gas stocks Rex International and RH Petrogras and coal play Geo Energy Resources continued to show up in the list of the top 10 most active counters. Rex closed unchanged, and RH Petrogas and Geo Energy inched up 1.5 per cent and 6.7 per cent respectively.

Offshore and marine giant Sembcorp Marine topped the day's most active counters, with 194 million shares done; the counter fell S$0.003 or 3.19 per cent to S$0.091.

Jardine Matheson Holdings led the day's losses, falling US$1.03 or 1.74 per cent to US$58.09. The mainboard-listed conglomerate on Thursday reported a net profit of US$1.9 billion for the full year ended Dec 31, reversing from a loss of US$394 million a year ago.

Jiutian Chemical Group gained S$0.003 or 3.61 per cent to S$0.086. Last week, the chemical manufacturer announced a strong set of results; its FY2021 net profit was up 79 per cent to 310 million yuan (S$67 million), aided by higher average selling prices of dimethylformamide (DMF) and methylamine.

In a recent report titled "High octane performance", CGS-CIMB reiterated its "add" rating on the counter, with a target price of S$0.15, pointing out that its FY2021 net cash position stood at around 90 per cent of its market capitalisation. Possible catalysts, it said, included stronger DMF average selling prices and a higher dividend payout in May.