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Singapore shares post 0.2% recovery after sell-off on China virus fears

THE outbreak of a new coronavirus originating in Wuhan evoked memories of 2003's Sars epidemic, sending Asia's markets lower on Tuesday but they staged a recovery the following day after Chinese officials stepped up containment efforts, easing worries.

With the global economy continuing its recovery, a "Phase One" trade deal in the bag and US-Iran tensions in the rear-view mirror, investors turned to bargain-hunting after the sell-off.

In the Singapore market, the Straits Times Index (STI) - which sank 1 per cent on Tuesday - closed at 3,253.93 after a gain of 6.76 points or 0.2 per cent. Across the market, advancers pipped decliners 209 to 205. Nine of the benchmark's 30 counters ended in the red.

Performance on the STI was muted compared to other Asia-Pacific benchmarks, which were similarly on the mend. Australia, China, Hong Kong, Japan and South Korea were comfortably higher. Bucking the trend was Malaysia's Kuala Lumpur Composite Index, which shed 9.35 points or 0.6 per cent to 1,577.98. Taiwan was closed.

Investors may have taken advantage to pick up stocks at attractive valuations but it is still early days in determining the extent of the outbreak of the Wuhan coronavirus.

If it ends up being labelled an international public health emergency, FXTM market analyst Han Tan noted it could result in "further losses in riskier assets while boosting demand for safe havens".

"If the authorities around the world show signs of failing to contain the coronavirus for an extended length of time, that could prompt a sustained risk-off period in the markets," he added.

Trading volume in Singapore was two billion securities, 70 per cent over the 2019 daily average. Total turnover came in at S$1.09 billion, in line with last year's daily average, suggesting volume was driven by trading in pennies, particularly those of the local market's medical stocks.

Medtecs International was the bourse's most active counter, adding 0.6 Singapore cent or 6.5 per cent to 9.8 cents with 166.6 million shares traded. Over the past two sessions, shares in the provider of healthcare products and hospital services surged 88 per cent from Monday's close of 5.2 cents.

Singapore Exchange market strategist Geoff Howie observed that the combined turnover on the counter over the past two sessions hit S$30 million. At end-2019, Medtecs had a market capitalisation of S$20 million.

Other medical plays also saw keen interest, with Healthway International adding 0.3 Singapore cent or 7.5 per cent to 4.3 cents, and IHH Healthcare gaining S$0.06 or 3.2 per cent to S$1.94.

Meanwhile, contra traders were likely to have taken profit on AsiaMedic Limited (down 0.2 Singapore cent or 11.1 per cent to 1.6 cents) after a 40 per cent jump on Tuesday. 

In light of the recent virus outbreak, shares in Malaysian glove maker Top Glove advanced S$0.13 or 7.6 per cent to S$1.84.

Citi Research analysts said in a recent report that the outbreak of the Wuhan coronavirus "may put the Malaysian glove-makers under the spotlight, whose products act as inexpensive protective barriers which could see a surge in sales should the outbreak continue to deteriorate at a global scale leading to a pandemic, particularly with Chinese New Year around the corner".

Further escalation could however support near-term buying interest, particularly the sector bellwethers like Top Glove, Citi analyst Megat Fais said.