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STI closes 0.2% lower on Thursday as Covid-19 worries in US spike

SINGAPORE equities appeared set for another positive showing but a state of emergency being declared in California and Washington due to the Covid-19 outbreak derailed that run.

On Thursday, the Straits Times Index (STI) was up for most for the session until the news development caused US futures to fall further while Europe dipped. The STI closed 6.76 points or 0.2 per cent lower at 3,018.27.

Up until news broke, sentiment in the local market was improving due to monetary and fiscal stimulus measures by authorities to mitigate the economic impact of the novel coronavirus.

Elsewhere in the Asia-Pacific, most equity benchmarks were higher, due in part to them closing before sentiment dipped. Australia, China, Hong Kong, Japan Malaysia, South Korea and Taiwan all finished higher.

"I honestly thought risk would trade much better today, but with the lack of any supportive news flows in Asia, investor sentiment wobbles. Markets become easily influenced by the dominant narrative in the media cycle, where Covid-19 fears and Fed rate cut skepticism rule the roost," said AxiCorp chief market strategist Stephen Innes on Thursday's session.

Trading volume in Singapore was 1.74 billion securities, 47 per cent over the 2019 daily average. Total turnover came to S$2.08 billion, close to double last year's intraday mean.

Across the broader market, advancers outpaced decliners 237 to 214. Eighteen of the blue-chip index's 30 components ended in the red.

Real estate investment trusts (Reits) continued to see strong interest among traders after their record day on Wednesday.

Among Reits on the STI, Ascendas Reit led the way, jumping S$0.12 or 3.6 per cent to S$3.45, its highest closing since listing in November 2002.

Meanwhile, CapitaLand Mall Trust units closed S$0.07 or 2.9 per cent higher at S$2.53 and Mapletree Commercial Trust added S$0.06 or 2.7 per cent higher at S$2.30. These three Reits figured among the STI's five most active counters of the day.

As Reits continued to climb, the banks extended their declines.

The local lenders were among the main laggards on the STI as investors anticipate other central banks to take cues from the US Federal Reserve in lowering borrowing rates.

DBS Group Holdings fell S$0.31 or 1.3 per cent to S$23.60, OCBC Bank lost S$0.13 or 1.2 per cent to S$10.42 while United Overseas Bank was finished at S$23.74, down S$0.26 or 1.1 per cent.

The fall in share prices of banks has made them attractive for some.

PhillipCapital principal trading representative Marcus Toh noted that the local banks were now trading at a dividend yield of between 4.6 and 5.4 per cent. "This should bode well for long-term investors who intend to buy banks on the recent weakness," he told The Business Times.

Among listings in the second line, Amara Holdings shares closed flat at 39.5 Singapore cents. RHB Research sees value in property developer and hotelier even though FY2020 earnings are likely to be impacted by the Covid-19 outbreak.