STI's rally loses steam, ends 0.7% lower on Thursday

The recent rally in the Singapore equity market fizzled out on Thursday, as optimism gave way to the harsh reality facing the local economy due to the Covid-19 outbreak.

Before trading commenced, official advanced growth estimates showed a 2.2 per cent contraction in Q1, worse than street expectations of a 1.4 per cent decline. Singapore's manufacturing, services and construction sectors all recorded declines together for the first time since the Asian Financial Crisis in 1998.

With the city-state likely headed for its first full-year recession since 2001, the Ministry of Trade and Industry lowered its 2020 growth forecast to a range of -4 to -1 per cent.

The focus thereafter shifted to the supplementary budget address by Deputy Prime Minister and Minister of Finance Heng Swee Keat, in which he announced that a record S$48.4 billion is being committed to help Singapore weather the storm of Covid-19's impact on the economy.

On Thursday, the blue-chip index traded more than 2 per cent down in the early session, but eventually clawed back most of the morning's losses to finish 17.91 points or 0.7 per cent lower at 2,487.56.

Of the 29 counters on STI that were actively traded - Singapore Airlines (SIA) shares were halted before market open - 16 closed in the red.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

During his speech, Mr Heng said SIA - part of the bruised aviation sector - is considering a corporate action with the support of state investor Temasek Holdings. The national carrier recently announced that it has slashed its capacity by  96 per cent and grounded most of its fleet.  

As a proxy to SIA, shares in subsidiary SIA Engineering jumped following the address by Mr Heng; it ended S$0.21 or 12.6 per cent higher at S$1.88. 

Ground handler SATS was another counter that received a boost, advancing S$0.23 or 7.4 per cent to S$3.32 after the government revealed a S$350 million aviation-support package to reduce costs for the sector.

Market performance was mixed across other sectors.

Among telcos, shares in Singtel fell S$0.08 or 3.1 per cent to S$2.52; Starhub added S$0.05 or 3.9 per cent to S$1.32.

DBS Group Research analyst Sachin Mittal lowered FY2021 earnings for the duo by 9-10 per cent on the premise that the Covid-19 outbreak will last throughout the year, curbing travel into Singapore.

"Roaming revenue in Singapore (which makes up 12-20 per cent of mobile revenue) will be the biggest casualty followed by prepaid mobile revenue (which comprises 15-20 per cent of mobile revenue)," he wrote in a report on Thursday.

Food-and-beverage player Jumbo Group edged down 0.5 Singapore cent or 2.4 per cent to 20.5 cents.

On Thursday, RHB Research joined DBS in lowering its recommendation for the restaurant group to "neutral". "As Jumbo's food-service brands largely cater to tourists, corporate dining and social gatherings, we expect its domestic sales to be significantly impacted this year, before recovering in FY21," said RHB analyst Juliana Cai.

Trading volume in Singapore was 1.37 billion securities; total turnover was S$1.82 billion.

Across the broader market, decliners outpaced advancers 287 to 149.

Elsewhere in the Asia-Pacific, it was a mixed bag for equity benchmarks. Australia, Malaysia and Taiwan closed higher. On the other hand, China, Hong Kong, Japan and South Korea were lower.