STI falls 1.7% on Wednesday as Covid-19 fears fester

SINGAPORE'S Straits Times Index (STI) slipped on Wednesday as worries over Covid-19 infection numbers and the economic damage triggered by the virus continued to bug investors.

Overnight, US President Donald Trump warned of a "very, very painful two weeks" for the US, as American deaths from the coronavirus could hit 240,000.

Furthermore, fears are mounting over a spike in infections in India, which until recently, was relatively shielded from the outbreak. This, AxiCorp chief global markets strategist Stephen Innes said, "suggests Asia's worst nightmare may become a reality". 

China's private survey of factory data, which focuses on small and medium-sized enterprises (SMEs), may have pointed to expansion in March, but manufacturing data in other Asian economies like Japan and South Korea saw considerable falls, weighing on sentiment.

The STI opened 0.5 per cent lower, extending those losses in the afternoon session to finish 40.96 points or 1.7 per cent lower at 2,440.27, with all but three of the local benchmark's 30 counters ending in the red.

Elsewhere in the Asia-Pacific, equity benchmarks in China, Hong Kong, Japan, Malaysia, South Korea and Taiwan registered losses. Australia's ASX 200 continued to buck the trend, advancing 181.80 points or 3.6 per cent to 5,258.60.

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The Singapore banks were laggards on the STI, following an announcement by the Monetary Authority of Singapore that financial institutions should structure certain relief packages to allow distressed property owners and SMEs defer debt repayments or payments on insurance policies during the Covid-19 induced slowdown.

DBS dropped S$0.42 or 2.3 per cent to S$18.15; OCBC Bank fell S$0.15 or 1.7 per cent to S$8.49, while United Overseas Bank ended at S$19.09, down S$0.36 or 1.9 per cent.

Jefferies analyst Krishna Guha noted that at worst, the measures could see revenues for the trio to decline by 14-18 per cent in FY2020. That said, he pointed out lower credit costs could cushion the impact, along with "comfort" around valuation, capital and ample liquidity. 

Venture Corporation finished S$0.42 or 3.1 per cent lower at S$13.15. On Wednesday, UOB Kay Hian and DBS Group Research lowered their FY2020 earnings estimates for the electronics manufacturing-services firm by 16 per cent and 5 per cent respectively, due to ongoing supply disruption from Covid-19.

Nonetheless, DBS Group Research analyst Ling Lee Keng expects Venture to emerge stronger from the current pandemic crisis "due to its expertise, its strong relationship with customers as well as a healthy balance sheet".

Among STI counters, units in Ascendas Reit fell S$0.02 or 0.7 per cent to S$2.81 after the industrial property trust said on Tuesday after market close that it had acquired a 25 per cent stake in Galaxis, a business park in one-north, for S$102.9 million. 

While the acquisition price of S$963 per square foot is 12-13 per cent higher than that for the nearby Nexus@one-north and Solaris business parks, Citi Research analyst Brandon Lee described the premium as fair, given the allowable 30 per cent white component for the Galaxis site.

Following the deal, Singapore business parks form 34 per cent of Ascendas Reit's assets under management.

Across the Singapore market, decliners outpaced advancers 298 to 138, with 1.27 billion securities valued at S$1.31 billion changing hands.