Singapore shares drop 0.7% on Thursday as global recession fears grow

Investment sentiment continues to seesaw since US President Donald Trump declared tariffs on remaining Chinese imports. That said, investors in Asia on Thursday were mostly concerned over global recession fears, thanks to a brief US yield curve inversion, this time of the US 10-year and two-year treasury yield curve.

This saw Asian indices open sharply lower - Singapore's Straits Times Index dropped two per cent at the open. But in a mirror image of Tuesday's performance, the local benchmark trimmed away at early losses to finish at 3,126.09, down 21.51 points or 0.7 per cent.

Elsewhere in the Asia-Pacific, shares in Australia, Japan and Malaysia were also closed lower. Meanwhile, China and Hong Kong closed higher. The latter, mired in protests for the past 10 weeks, staged a surprising performance as investors from the mainland went bargain hunting. Markets in South Korea were closed.

Markets were also bothered by other indicators that the health of the global economy was heading southward such as the disappointing economic data releases from China, Germany and the Eurozone.

In Singapore, trading volume clocked in at 1.28 billion securities, 7 per cent more than daily average in the first seven months of 2019. Total turnover came to S$1.44 billion, 36 per cent over the January-to-July daily average. Across the market, decliners trumped advancers 258 to 156. The blue-chip index had 14 of the 30 counters closing in the red.

Yangzijiang Shipbuilding, which resumed trading on Thursday morning after being halted last Thursday, plummeted 18 Singapore cents or 17.3 per cent lower at 86 Singapore cents with 129.3 million shares traded, the most active on the Singapore bourse. Shares are now at a two-and-a-half year low.

Traders have said that the shipbuilder's stock is oversold but were not surprised that investors have yet to "bottom fish" stocks. The shipbuilder's shares have dived 40 per cent since Tradewinds reported on Aug 1 that Liu Jianguo, chairman of Yangzijiang executive chairman Ren Yuanlin's charity foundation, is under investigation for disciplinary violations by the Chinese authorities as part of the government's anti-corruption crackdown.

Financials were the other main laggards dragging the benchmark lower. DBS Group Holdings dropped S$0.29 or 1.2 per cent to S$24.70. Meanwhile, the other two local banks fared worse as they traded ex-dividend on Thursday. OCBC Bank fell S$0.40 or 3.6 per cent to S$10.70, while United Overseas Bank (UOB) closed at S$25.15, down S$0.75 or 2.9 per cent.

Singtel shares stopped a two-day slide since releasing earnings, adding S$0.07 or 2.2 per cent up at S$3.23. The telco's shares had fell 4 per cent across the two session after it posted a 35 per cent fall in net profit for Q1.

With economic data from most major economies reaffirming a global slowdown on our hands, investors continued to pick up real estate investment trusts (Reits). Among the main gainers were Mapletree North Asia Commercial Trust (up S$0.03 or 2.4 per cent to S$1.29) and CapitaLand Commercial Trust (up S$0.04 or 2 per cent to S$2.07).