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Singapore shares drop 0.2% on Tuesday on profit-taking, Iran sanctions

LAST week's equity market rally has fizzled out as investors took to booking profits, with sentiment dampened by a new round of US sanctions on Iran. That said, the focus will be on this weekend's meeting between the US and China at the G-20 summit.

These factors set the scene for the Straits Times Index (STI) ending 7.26 points or 0.2 per cent lower at 3,304.27.

Like Singapore, most other markets in the region ended in negative territory. Among key Asia-Pacific markets, Australia, China, Hong Kong, Japan and South Korea ended lower. Meanwhile, Malaysia closed flat.

Markets were given a lift on expectations of the US Federal Reserve's dovish stance and on the American and Chinese leaders agreeing to convene on the sidelines of the G-20 summit in Osaka.

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Observers noted that a July rate cut by the Fed has already been priced in. They said, however, that this weekend's meeting in Osaka should be viewed as a short-term market catalyst amid a global economic slowdown.

In Singapore, trading volume clocked in at 1.15 billion securities, 96 per cent of the daily average in the first five months of 2019. Total turnover came to S$1.16 billion, 11 per cent over the January-to-May daily average. 

Across the market, decliners outpaced advancers 220 to 166. The STI had 14 of its 30 components ending in the red.

With other central banks following the Fed's accommodative stance, investors continued to pick up more real estate investment trusts (Reits). At present, interest is showing few signs of abating even though in recent sessions, dealers have told The Business Times that valuations for most Reits are now high.

On Tuesday, UBS Global Wealth Management joined the chorus, saying in its July CIO Investing in Asia-Pacific report that local Reits are "beginning to look overpriced".

CapitaLand Mall Trust (closed S$0.04 or 1.5 per cent higher at S$2.64) and CapitaLand Commercial Trust (closed S$0.01 or 0.5 per cent up at S$2.15) saw considerable trading activity during the session.

Financials extended Monday's dip. DBS Group Holdings closed S$0.17 or 0.7 per cent lower at S$25.60, OCBC Bank dipped S$0.03 or 0.3 per cent to S$11.25 while United Overseas Bank finished at S$25.70, dropping S$0.16 or 0.6 per cent.

The UBS report said that the local banks, which have above-average dividend yields, are "starting to look more attractive".

On 41.8 million shares traded, Singtel was the benchmark index's most traded stock on Tuesday. The telco added S$0.03 or 0.9 per cent to S$3.48.