Singapore shares open sharply lower on Tuesday; STI down 1% to 3,138.49

SINGAPORE shares tumbled after the market opened on Tuesday following a long weekend break to face rising US-China trade tensions, escalating Hong Kong protests, an Argentine peso crash and slashed growth and export forecasts at home.

The Straits Times Index lost 0.96 per cent, or 30.45 points to 3,138.49 as at 9.01am.

Overnight on Wall Street stocks suffered a bruising session overnight, as worries over the protracted US-China trade war hit banking shares and the broader market. The benchmark S&P 500 fell 1.2 per cent, and the tech-heavy Nasdaq Composite similarly saw a 1.2 per cent decline, while the Dow Jones Industrial Average booked a 1.5 per cent loss.

On the Singapore bourse, losers outnumbered gainers 89 to 38, after about 38.9 million shares worth S$113.5 million changed hands.

Among the most heavily traded by volume, healthcare player Health Management International added 0.7 per cent, or 0.5 Singapore cent to 72.5 cents, with five million shares traded; while Singtel lost 0.3 per cent, or one cent to S$3.25, with some 3.1 million shares traded.

All three local banks were also down in the early morning trade - DBS slipped 0.08 per cent, or two cents to S$24.92, UOB lost 0.9 per cent, or 22 cents to S$25.83 on a cum-dividend basis, and OCBC fell 1.1 per cent, or 12 cents to S$10.97 on a cum-dividend basis.

Other active stocks included Hongkong Land which plunged 4.6 per cent, or 25 US cents to US$5.20 on a cum-dividend basis, and Jardine Matheson Holdings which fell 4.5 per cent, or US$2.49 to US$52.59.

CMC market analyst Margaret Yang noted that deteriorating external markets over the four-day National Day holiday break resulted in a "knee-jerk selloff" early Tuesday morning.

"Hong Kong-related companies namely Hongkong Land, Jardine Matheson, Jardine C&C were among the worst performing blue chips, whereas domestic-focused counters namely ST Engineering, CapitaCom Trust (CapitaLand Commercial Trust), UOL were outperforming," Ms Yang explained.

Also on Tuesday, Singapore cut its official growth forecast for the second quarter running, on the back of a flat economic performance in the first half of the year. The gross domestic product is likely to come in between zero growth and 1 per cent for the full year, the Ministry of Trade and Industry said.

This is in line with OCBC's earlier call for a zero to 1 per cent year-on-year growth, the bank said in a research note on Tuesday morning.

Enterprise Singapore meanwhile slashed its forecast for non-oil domestic exports to -9 to -8 per cent for the year.

Elsewhere, Asian equities slipped as fears over a drawn out US-China trade war, protests in Hong Kong and a crash in the Argentina peso drove investors to safe haven assets.

The MSCI's broadest index of Asia-Pacific shares ex-Japan fell 0.3 per cent, while Japan's Nikkei tumbled 1.3 per cent.

"As the Hong Kong protests extended into its 10th consecutive week, investors are getting increasingly concerned about the city's short-term economic development and long-term stability. A plunge in Hong Kong's domestic airline, properties, luxury retailers and banking sector reflected a bearish outlook, as recent riots have exerted a very negative impact on its global image, business conductivity and investments," Ms Yang added.

On the commodities front, Phillip Futures analyst Benjamin Lu noted that rising market risks over shaky economic fundamentals, and US trade protectionism have kept investors vested within safe haven assets.

Spot gold closed at US$1,511.16 per ounce on Aug 12, with a 0.94 per cent gain against last Friday's closing price.

"Gold prices broke new ground (2019 highs) as investors pivot increasingly towards safe haven assets. A protracted US-China trade spat has diminished global risk appetites substantially as markets weigh subdued economic momentum in H2 2019. Heightened geopolitical risks from Hong Kong protests along with global growth concerns remain largely supportive towards safe haven flows in the current term," Mr Lu said.

"A dovish US Federal Reserve along with weaker US dollar prospects look poised to support stronger gold prices for the coming term," Mr Lu added.