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STI closes 7.4% lower -- its largest single-day decline since October 2008

SINGAPORE'S Straits Times Index (STI) had its largest single-day fall since Oct 24, 2008, when the benchmark lost 8.3 per cent.

The blue-chip index opened 5.7 per cent lower after last Friday's relief rally. Sell-offs in the local market persisted as investors continued to liquidate assets, preferring to hold cash, in particular the US dollar.

The STI closed 177.26 points or 7.4 per cent lower at 2,233.48 with all 30 counters finishing with losses. This has left the STI firmly in bear territory, down 34.6 per cent from the 52-week high of 3,415.18 reached during the April 29, 2019 session.

Stimulus measures by policymakers worldwide are having little effect as global recessionary fears due to Covid-19 continue to rise. Sentiment was also dealt a further blow over the weekend when the US Senate Democrats blocked the upper house's coronavirus economic response rescue package.

With Covid-19 cases in the US and Europe continuing to rise, the sell-offs in markets should continue. IG market strategist Pan Jingyi said local equity performance is likely to remain "largely externally influenced", with stabilisation only expected once investors believe the worst of the pandemic is over.

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As a virus-induced recession gathers pace, Standard Chartered Bank on Monday lowered its 2020 growth forecast for Singapore to -2 per cent from 0.8 per cent previously.

Singapore Airlines (SIA) dived S$0.66 or 11 per cent to S$5.36. On Monday, the national carrier cut 96 per cent of its planned capacity up to end-April, and described the Covid-19 pandemic "the greatest challenge" it has ever faced. 

UOB Kay Hian research analyst K Ajith said: "SIA’s steep decline in stock price to a 21-year low reflects on-going concerns over cash burn and ability to meet debt obligations. Barring an announcement of state support, we believe the stock will continue to underperform the STI."

Sell-offs in Singapore real estate investment trusts (S-Reits) resumed with the iEdge S-Reit Index down 78.82 points or 7.7 per cent to 948.14.

"The sharp sell-off among S-Reits has led to a spike in dividend yields, likely reflecting market concerns around refinancing risks that confronted the sector during the global financial crisis (GFC) period," wrote equity research analysts at Morgan Stanley on Monday. 

That said, they pointed out sell-offs have been "overdone", given balance sheets of S-Reits are "more robust and less stretched" than during the GFC. Aggregate leverage levels and short-term debt for S-Reits are lower while average debt maturities are higher.

Top Glove was one of the few gainers, advancing S$0.07 or 3.6 per cent to S$2.01. With the Covid-19 outbreak expected to escalate further, Citi Research analyst Megat Fais expects the glove maker to record a strong performance in the second half of FY2020.

Anticipating strong orders from Top Glove's European and US based clients, who account for more than 60 per cent of sales, Citi raised its earnings estimates for the glove maker by 3-4 per cent.

Trading volume in Singapore was 1.43 billion securities; total turnover was S$1.81 billion. Across the broader market, decliners trumped advancers 421 to 95.

Elsewhere in the Asia-Pacific, equity benchmarks in Australia, China, Hong Kong, Malaysia and South Korea were markedly lower.

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