Singapore shares drop 0.5% on Monday amid cautious sentiment

The local market was in a cautious mood for the most part, as investors wait for details on the US Federal Reserve's June meeting for when rate hikes will be implemented this year.

Singapore's Straits Times Index (STI) closed at 3,207.99, easing 14.64 points or 0.5 per cent. 

Investors remain concerned by the global economic slowdown and US-China trade tensions though sentiment was given a lift in recent weeks on expectations of dovish Fed outlook. The Fed meeting on Wednesday may have an impact on whether region central banks will take to rate cuts to combat easing economic growth.

"With increased odds of the Fed easing, it's hard to see Asian central banks resisting easing pressure for too long now,"  ING's Asia economist Prakash Sakpal, noted.

Next week's G-20 Summit in Osaka is also coming at a crucial juncture for US-China trade relations, especially with potential US tariffs on about US$300 billion more of Chinese imports possibly due in July.

In Singapore, trading volume clocked in at 1.20 billion securities, in line with the daily average in the first five months of 2019. Total turnover came to S$969.42 million, 93 per cent of the January-to-May daily average.

Across the market, decliners outpaced advancers 225 to 159. The STI had half of its 30 components in the red.

Investors in the local market took up positions in local telecommunications picks.

On 23.7 million shares traded, Singtel was the benchmark index's most traded stock on Monday. The telco gained one Singapore cent or 0.3 per cent to close at S$3.34. Fellow telco StarHub added two Singapore cents or 1.4 per cent to S$1.49.

Traders noted that investors have been stocking up on defensively positioned telcos on the uncertain global outlook. 

Across the broader market, NetLink NBN Trust, which has a significant domestic market share in fibre network infrastructure, was among the most heavily traded by volume. Units in the business trust were two Singapore cents or 2.4 per cent up at S$0.87 with 34.5 million shares traded.

"The larger-than-usual volume could mean that institutional buying was at play. NetLink offers defensive income prospects in relation to recent unfavourable US-China developments," UOB Kay Hian trading representative Brandon Leu said.

It was a mixed day at the office for financials. DBS Group Holdings closed S$0.14 or 0.6 per cent lower at S$24.67. Meanwhile, OCBC Bank edged up two Singapore cents or 0.2 per cent up at S$10.80 and United Overseas Bank ended at S$25.11, advancing S$0.12 or 0.5 per cent.

Mercurius Capital Investment, which closed flat at S$0.42, also saw heavy trading on Monday with 20.7 million shares traded. Trading volume on the day was 10 times the daily average trading value over the last 15 trading days.

Before the market open on Monday, the Catalist-listed firm announced that it is looking to acquire half of a Thai private property developer Grand Bay Hotel and jointly develop a resort in Phuket, Thailand.