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Singapore shares fall 0.6% as Wuhan virus fears rattle investors
WALL Street may have turned in a slightly positive showing on Wednesday thanks to strong earnings by US corporates but regional equity markets failed to follow suit.
Investors in Asia remain unsettled over how the Wuhan coronavirus will spread across the Chinese New Year holidays.
Singapore's Straits Times Index (STI) was mired in the red, closing at 3,234.56 on Thursday, after giving up 19.37 points or 0.6 per cent. North-east Asian benchmarks in China, Hong Kong, Japan and South Korea averaged a 1.5 per cent fall.
The nature of the virus draws parallels to 2003's Sars epidemic and investors are rightfully concerned but Chinese authorities have been steadfast in containing the spread by effectively putting Wuhan in quarantine.
With that in mind, Oanda Asia-Pacific senior market analyst Jeffrey Halley noted Asian market performance "looks more precautionary than panic-driven".
Trading volume continued to be heavy at 2.19 billion securities, 85 per cent over the 2019 daily average. Total turnover was S$1.44 billion, 36 per cent over last year's daily average.
Decliners trumped advancers 285 to 152 while 27 of the benchmark's 30 counters ended in the red.
Thai Beverage was one of the STI's main laggards this week, with its shares down 9 per cent after dipping 0.5 Singapore cent or 0.6 per cent to 79 cents on Thursday.
Nomura analysts attributed the share price underperformance to "profit-taking as well as market concerns over the new law against drunk driving in Vietnam" but added the recent price weakness presented an opportunity to accumulate ThaiBev, which trades at cheaper valuations to peers. Nomura has a "buy" call with a target price of S$1.04.
The Reit (real estate investment trust) earnings season may be underway but market attention was on the latest attempt at consolidation in the sector.
On Wednesday, the STI's CapitaLand Commercial Trust (CCT) and CapitaLand Mall Trust (CMT) unveiled plans to form CapitaLand Integrated Commercial Trust (CICT). Subject to unitholder approval, the combined entity will be the biggest Reit in Singapore and third-largest in the Asia-Pacific.
DBS Group Research analysts Derek Tan and Rachel Tan said: "A bigger platform, CICT will be empowered with greater financial capacity and better ability to compete globally to take on bigger projects and/or redevelopments to drive better returns to shareholders."
Acknowledging that size, scalability and diversification are critical to driving Reit performance, RHB Securities analyst Vijay Natarajan recommended unitholders to accept the offer.
CCT units edged down S$0.01 or 0.5 per cent to S$2.12 while CMT units dipped S$0.02 or 0.8 per cent to S$2.57. CapitaLand, the sponsor of both Reits, fell S$0.04 or 1 per cent to S$3.85.
After posting a 2.9 per cent increase in Q4 distribution per unit to 1.4 Singapore cents, Keppel Reit - likely to be the sole pure play office Reit in Singapore if the CMT-CCT merger goes through, closed flat at S$1.27.
The DBS analysts are bullish on Keppel Reit's prospects as its "long weighted average lease expiry of 4.9 years, strong committed occupancy and the ability to sign higher than market rents are strong attributes of its portfolio". DBS has a "buy" recommendation on the Reit with a price target of S$1.45.