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Singapore shares open lower on Tuesday; STI down 0.2%

SINGAPORE shares fell at Tuesday's opening bell following huge losses in US markets overnight and Malaysia announcing it is restricting movement nationwide for two weeks from March 18 to fight the Covid-19 outbreak.

Amid a volatile session, the Straits Times Index (STI) lost 4.68 points or 0.2 per cent to 2,491.09 as at 9.59am.

Losers outnumbered gainers 177 to 43, after 91.3 million securities worth S$195 million changed hands.

Rex International was the most traded counter by volume in the morning, rising 0.2 Singapore cent or 1.7 per cent to 12.1 cents after 6.5 million shares were traded.

Other actives included Singtel, up S$0.01 or 0.4 per cent to S$2.55 on 6.3 million shares traded, while Yangzijiang Shipbuilding rose 0.5 Singapore cent or 0.6 per cent to 80.5 cents after 5.7 million shares changed hands.

Meanwhile, SGX was up S$0.25 or 3.1 per cent to S$8.33.

It was a mixed bag among local banks. DBS fell S$0.26 or 1.4 per cent to S$18.32, OCBC lost S$0.03 or 0.4 per cent to S$8.67 but UOB rose S$0.10 or 0.5 per cent to S$19.55.

CMC Markets analyst Margaret Yang said the STI's smaller losses this morning, compared to Wall Street, could be attributed to Covid-19's containment in China, which is a major driver of the Asia-Pacific economy. "This helps give investors some confidence," she added.

"US S&P 500 futures had rebounded 5 per cent, which also lifted Asia-Pacific futures and the STI higher," she opined. Ms Yang also noted the Asia-Pacific market outperformed the US market this month.

She added that it could be a technical rebound in response to huge losses in the US market, and is not supported by improvement in the fundamental picture with the Covid-19 pandemic still escalating globally.

"We have not yet reached the bottom, and risk is still skewed to the downside," she said.

Healthcare experts have said the pandemic may not end by August, therefore the economic damage of the virus may still get worse, Ms Yang added.

IG market strategist Pan Jingyi said there was more pain ahead, as with regard to the virus situation, "what we are seeing in the US is still in the initial phase".

She added that data from corporate earnings has yet to reflect Covid-19's impact. Once they do, it might drive further concerns among investors, Ms Pan added.

Wall Street stocks had their worst day since 1987 on Monday, joining the global market carnage as the coronavirus outbreak shut down a widening part of the US and global economy.

The Dow Jones Industrial Average plunged 12.9 per cent or nearly 3,000 points to 20,188.52. The broad-based S&P 500 dived 12.0 per cent to 2,386.13, while the tech-rich Nasdaq Composite Index shed 12.3 per cent to 6,904.59.

Malaysia on Monday night announced it will put entry restrictions in place, and all shops will close, with the exception of those selling food and daily essentials. Schools, private businesses and government departments will also close, except for those providing essential services.

The nationwide Movement Control Order will apply till March 31, banning mass movements and gatherings, including religious, sporting, social, and cultural activities. This includes the suspension of all religious activities in mosques.

Any effect Malaysia's lockdown might have on the Singapore market has not appeared, as "bluechip stocks are resilient and less reliant on Malaysia supplies", Ms Yang said.

Border crossings between both countries have not been shut, so disruptions aren't that severe, Ms Pan said.

Ms Yang added that the lockdown might affect more small- and mid-cap companies, and private sector businesses such as those in food and beverage and services.

It is also possible the potential economic effect of the shutdown hasn't set in to the markets yet, she said.

Elsewhere in Asia, Tokyo's benchmark Nikkei 225 index was down 3.0 per cent or 513.88 points to 16,528.11 minutes after the open, while the broader Topix index was down 2.7 per cent or 32.94 points at 1,203.40.