STI slips 0.49% on Evergrande, pandemic concerns

SINGAPORE shares capped a volatile week on a lower note on Friday, as fears over debt-hit China Evergrande Group's contagion risks and the rising Covid-19 wave across the region resurfaced after taking a backseat the previous day.

The key Straits Times Index (STI) fell 15.09 points or 0.49 per cent to 3,061.35, shrugging off two straight days of overnight gains on Wall Street following some clarity from the Federal Reserve on the tapering front. Week on week, the STI has fallen 9.88 points or 0.32 per cent.

Asian markets fared mostly lower amid an acute sense of caution across the board. Japan's benchmark jumped 2.06 per cent after reopening from Thursday's national holiday, Taiwan was up 1.07 per cent while key gauges in Hong Kong and China fell 1.3 per cent and 0.80 per cent respectively. South Korea closed flat. Benchmarks in Malaysia and Australia retreated 0.47 per cent and 0.37 per cent respectively.

While the US Fed's announcement on Wednesday strengthens the arguments for policy normalisation on the inflation front, lower growth forecasts show caution is still merited, said Maybank FX Research.

"We continue to expect a gradual and flexible Fed policy normalisation: a reduction in asset purchases and balance sheet stabilisation, followed by rate rises, to take the headline Fed funds rate to a peak of 2.5 per cent by 2026.

"Of course, there is no preset course. Flexibility means the Fed can adjust the policy path if the economic environment does not evolve as expected, as China has done with liquidity injections in the wake of the Evergrande fallout," the house added.

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Franklin Templeton Emerging Markets Equity's senior vice-president and portfolio manager Eric Mok noted that the biggest concern for the South-east Asia market is the Covid-19 situation. However, he added, a "very strong rebound" in these economies can be expected in the coming year as they start to reopen owing to high vaccination rates and once the worst of the pandemic is over.

On the home front, turnover came in at some 1.39 billion units worth S$1.30 billion. Losers outpaced gainers with 285 counters down and 184, up.

S59 : S59 0% (SIAEC) slipped S$0.01 or 0.47 per cent to S$2.13. The mainboard-listed group said on Friday that it signed an agreement with Hawaiian Airlines to expand airframe maintenance services for the latter's Airbus A330-200 fleet. Under the new agreement, SIAEC will be performing 12-year checks commencing March 2022.

Y92 : Y92 0% was one of the day's most active with 36 million shares worth S$24 million traded. The counter closed unchanged at S$0.655. The company is one of RHB Singapore's top buys given its spirit segment is a "stable cash cow" as well as the recovery in the beer and non-alcohol beverage businesses. There is also the potential upside from the listing of its beer business, said the house, which has a target price of S$0.94 on the counter.