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Singapore shares fall 0.5% as Budget euphoria wanes

THE Singapore stock market took a slight retreat on Thursday as the post-Budget euphoria began to wane and concerns over global growth resumed centrestage.

The benchmark Straits Times Index (STI) opened at 3,217.54 before closing at 3,198.68, down 0.47 per cent or 15.03 points. Gainers and losers were evenly matched at 203 each. Immediate support and resistance levels for the STI have been pegged at 3,200 and 3,250.

"With the Covid-19 outbreak remaining very much in the news, global trade and growth are the immediate concerns. Singapore's Budget has taken a backseat," said a remisier.

Save the brief initial knee-jerk reaction on Wednesday, Singapore's most expansionary Budget in more than two decades has been a non-event for the local stock market, worried about the economic impact of the virus, not just on Singapore's economy but globally as well.

Standard Chartered has lowered its 2020 global growth forecast to 3 per cent from 3.2 per cent, primarily driven by its revisions to China.

"We downgraded our China 2020 GDP growth forecast to 5.5 per cent from 5.8 per cent to reflect the longer-than-expected delay in restarting operations in China after the Lunar New Year holidays," its economists said, adding that this would be the slowest pace of growth since the 2008-2009 global financial crisis.

"Our core scenario is that the coronavirus will be contained by late-March, paving the way for a Q2 recovery," they said.

The main uncertainty remains the evolution of the virus situation around Asia and the rest of the world. While monetary and fiscal policy is expected to cushion the negative impact, it cannot fully compensate for the "deadweight loss to growth that is likely in Q1 2020," they said.

DBS equity research team's Yeo Kee Yan reckoned Singapore's measures to fight the outbreak could start showing their effectiveness as soon as end-February.

"At this rate, we think Chinese factories can even return to normalcy by end of Q1 2020, and factories could well make up for the lost time by ramping up production," the DBS analyst said.

Until then, expect the local market to move within a tight band, on continued profit-taking and playing-on-dips in selected penny stock counters which are not affected by the general market trend, brokers said.

On Thursday, the three local banks led the decline among large-cap stocks, while Yangzijiang Shipbuilding bucked the downtrend, closing up nearly 2 per cent. The China shipbuilder was among the "Covid-19 recovery leaders" that have been identified by DBS. Other gainers included Venture Corp and AEM.

Covid-19 recovery laggards included travel-related stocks like SIA, hospitality Reits, Genting Singapore, retail Reits such as Frasers Centrepoint Trust, Starhill Global Reit, Mapletree Commercial Trust and CapitaLand Mall Trust.

Hongkong Land, which had requested a trading halt at 4.20pm, later announced it has bought a site in Shanghai for 31 billion yuan (S$6.2 billion) for development into a commercial complex.