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STI overturns early losses to end 0.5% higher on Thursday

SINGAPORE'S Straits Times Index (STI) had a strong finish on Thursday, even as investors grapple with a rising rate of Covid-19 infections in the West and the growing sense that the worst is now over for Asia.

That said, equities found some support on higher oil prices, on hopes that a price war between Saudi Arabia and Russia can be resolved. Prices of black gold were also lifted by news that China may add more oil to its state reserves.

The STI traded more than 1.5 per cent lower in the early session, but eventually clawed back those losses after a strong opening in Europe and the futures market pointed to a positive open in the US. The local blue-chip index closed 12.76 points or 0.5 per cent higher at 2,453.03, with 14 of its 30 constituents ending in the red.  

Elsewhere in the Asia-Pacific, equity benchmarks were mixed. China, Hong Kong, Malaysia and South Korea registered gains. On the other hand, Australia, Japan and Taiwan ended lower.

In the local market, Singapore real estate investment trusts (S-Reits) continued to decline with the iEdge S-Reit Index ending 37.29 points or 3.4 per cent lower at 1,057.58.

On Thursday, DBS Group Research lowered its recommendations for some retail-focused S-Reits given that they face headwinds from lower shopper numbers and a bill that provides temporary relief to tenants on rental obligations for up to six months due to the Covid-19 outbreak.

DBS analysts Derek Tan and Rachel Tan wrote that Reit managers are likely to focus on conserving cash. This could see payout ratios fall from 100 per cent to 90 per cent for most retail S-Reits and distributions to unitholders lowered by 14 to 27 per cent due to rental rebates for tenants.

Nonetheless, DBS has preferred picks in this sector. They include the STI's Mapletree Commercial Trust (down S$0.13 or 7.4 per cent to S$1.62) and Lendlease Reit (down S$0.025 or 4.8 per cent to S$0.495), which is trading far below its initial public offer price of S$0.88.

Among telcos, Singtel shares continued to outperform the market, advancing S$0.10 or 4 per cent to S$2.62. Singtel's stock has jumped 8.2 per cent since reports emerged that Australian unit Optus could be selling its tower portfolio for A$2 billion (S$1.76 billion).

Meanwhile, telco infrastructure play Netlink NBN Trust added S$0.02 or 2.3 per cent to S$0.90.

Citi Research analyst Hussaini Saifee pointed out that risks facing the business trust due to the Covid-19 outbreak are "likely limited and even if its regulated returns are revised down". The bank-brokerage is of the view that Netlink units would still be trading at a "sustainable" dividend yield of 5.5 per cent in a worst-case scenario.

STI counters sensitive to the price movements of oil were also up. Keppel Corp added S$0.22 or 4.2 per cent to S$5.51 and Sembcorp Industries gained S$0.02 or 1.3 per cent to S$1.55.

Across the Singapore market, advancers outpaced decliners 229 to 210, with 1.49 billion securities valued at S$1.56 billion changing hands.

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