Business
By Tang See Kit 14 May 2021 08:38PM
SINGAPORE: Singapore shares tumbled to a more than two-month low on Friday (May 14), with aviation-related counters among the worst hit, as investors reacted to a further tightening in the country’s COVID-19 restrictions.
To curb the rising number of community infections, dining-in will once again be prohibited and a new limit of two people for all social gatherings will kick in from Sunday for four weeks. Among other measures, the COVID-19 multi-ministry task force also announced a return to working from home as the default.
The benchmark Straits Times Index (STI) fell more than 3 per cent following the announcement just after 1pm, before clawing back some losses to close down 2.2 per cent or 68.24 points at 3,055.02. This marked the STI’s lowest level since Mar 8.
For the day, losers outnumbered gainers by 467 to 127 with 3.52 billion units worth S$3.22 billion changing hands.
“The market is not prepared for this drastic tightening of COVID-19 measures, which is happening so quickly after the earlier reduction,” said DailyFX’s strategist Margaret Yang, referring to how the group limit for social gatherings was cut from eight to five people slightly more than a week ago.
“It reflects that the situation may be worse than we anticipated,” she added. “On the economic level, there will also definitely be some adverse impact on the services and travel sectors.”
IG’s market strategist Yeap Jun Rong said the local equity market, which has chalked up a strong run since the start of the year, was pricing in a strong economic recovery on the back of a relatively controlled pandemic in Singapore.
“The recent resurgences seem to cast doubt on the pace of economic recovery ahead, leading to near-term weakness in the STI, considering that a significant proportion of its constituents are in cyclicals,” he told CNA. A cyclical stock is one whose underlying business generally follows the economic cycle.
Aviation counters were among those badly hit. National carrier Singapore Airlines (SIA) fell 5.7 per cent to an 11-week low of S$4.50, while flight caterer SATS dropped 3.9 per cent to S$3.69.
In addition to the heightened restrictions, the air travel bubble between Singapore and Hong Kong that was due to start on May 26 may be in for another delay . Transport Minister Ong Ye Kung said on Friday it is “very likely” that Singapore will not be able to meet the criteria for the travel bubble to go ahead.
“Investors had been hoping for the roll-out of the vaccine to spur an economic recovery and a broader border reopening, but we are now moving backwards and it might take longer than we thought for the aviation industry to recovery,” said Ms Yang.
Integrated resort operator Genting Singapore declined 3.1 per cent to S$0.79.
Banking heavyweights were also in the red – OCBC and UOB lost more than 2 per cent each, while DBS dropped 0.7 per cent.
On the other hand, shares of supermarket chain Sheng Siong surged nearly 11 per cent to S$1.66.
Describing this aso a knee jerk reaction to the ban on dine-ins, Ms Yang said: “If you look around, there are not a lot of safe-haven stcks left. Most of the sectors are badly hurt and supermarkets are the only ones benefiting from this return to stricter measures.”
Among other heavily-traded stocks, Singtel fell 3.7 per cent to S$2.32 after warning that it expects to record net exceptional losses of S$1.21 billion in its full-year results , mostly due to the impairment of assets and goodwill at two businesses.
MORE DOWNSIDE TO COME?
Moving forward, the number of unlinked community cases will likely play a part in determining how the stock market moves over the next two weeks, said CMC Markets analyst Kelvin Wong.
“If the number of unlinked community cases continues to be on the rise in the next two weeks, it implies that more stringent measures are likely to be implemented such as a ‘circuit breaker 2.0’,” he said.
“Thus, stocks that are geared towards hospitality and travel, such as Genting, SIA, CapitaLand Integrated Commercial Trust may see further declines.”
Mr Yeap also expects stocks related to the retail, hospitality and entertainment sectors to come under further pressure, given uncertainties about how the COVID-19 situation will evolve.
Investors may opt for a “risk-off approach” in the near term, he said, considering that the STI has had a strong run since the start of the year and “may be due for some profit-taking” given the current uncertainties.
“That said, the overall downside impact may be limited considering that prompt action was taken to limit the virus spread and more than 20 per cent of Singapore’s population has been fully vaccinated,” said the market analyst from IG.
Download our app or subscribe to our Telegram channel for the latest updates on the coronavirus outbreak: https://cna.asia/telegram
Source: CNA/sk
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Singapore shares tumble 2.2% to more than two-month lows, as tighter COVID-19 curbs raise jitters
Office workers in protective face masks at Singapore's Central Business District. (File photo: Calvin Oh)By Tang See Kit 14 May 2021 08:38PM
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SINGAPORE: Singapore shares tumbled to a more than two-month low on Friday (May 14), with aviation-related counters among the worst hit, as investors reacted to a further tightening in the country’s COVID-19 restrictions.
To curb the rising number of community infections, dining-in will once again be prohibited and a new limit of two people for all social gatherings will kick in from Sunday for four weeks. Among other measures, the COVID-19 multi-ministry task force also announced a return to working from home as the default.
READ: Group sizes down from 5 to 2, dining-in suspended as Singapore tightens COVID-19 measures
The benchmark Straits Times Index (STI) fell more than 3 per cent following the announcement just after 1pm, before clawing back some losses to close down 2.2 per cent or 68.24 points at 3,055.02. This marked the STI’s lowest level since Mar 8.
For the day, losers outnumbered gainers by 467 to 127 with 3.52 billion units worth S$3.22 billion changing hands.
“The market is not prepared for this drastic tightening of COVID-19 measures, which is happening so quickly after the earlier reduction,” said DailyFX’s strategist Margaret Yang, referring to how the group limit for social gatherings was cut from eight to five people slightly more than a week ago.
“It reflects that the situation may be worse than we anticipated,” she added. “On the economic level, there will also definitely be some adverse impact on the services and travel sectors.”
READ: New COVID-19 measures in Singapore: What is allowed under the tighter restrictions?
IG’s market strategist Yeap Jun Rong said the local equity market, which has chalked up a strong run since the start of the year, was pricing in a strong economic recovery on the back of a relatively controlled pandemic in Singapore.
“The recent resurgences seem to cast doubt on the pace of economic recovery ahead, leading to near-term weakness in the STI, considering that a significant proportion of its constituents are in cyclicals,” he told CNA. A cyclical stock is one whose underlying business generally follows the economic cycle.
Aviation counters were among those badly hit. National carrier Singapore Airlines (SIA) fell 5.7 per cent to an 11-week low of S$4.50, while flight caterer SATS dropped 3.9 per cent to S$3.69.
In addition to the heightened restrictions, the air travel bubble between Singapore and Hong Kong that was due to start on May 26 may be in for another delay . Transport Minister Ong Ye Kung said on Friday it is “very likely” that Singapore will not be able to meet the criteria for the travel bubble to go ahead.
READ: Singapore-Hong Kong travel bubble may be delayed; decision by early next week: Ong Ye Kung
“Investors had been hoping for the roll-out of the vaccine to spur an economic recovery and a broader border reopening, but we are now moving backwards and it might take longer than we thought for the aviation industry to recovery,” said Ms Yang.
Integrated resort operator Genting Singapore declined 3.1 per cent to S$0.79.
Banking heavyweights were also in the red – OCBC and UOB lost more than 2 per cent each, while DBS dropped 0.7 per cent.
On the other hand, shares of supermarket chain Sheng Siong surged nearly 11 per cent to S$1.66.
Describing this aso a knee jerk reaction to the ban on dine-ins, Ms Yang said: “If you look around, there are not a lot of safe-haven stcks left. Most of the sectors are badly hurt and supermarkets are the only ones benefiting from this return to stricter measures.”
READ: Singapore’s stocks ‘adequate’ at supermarkets and ‘supply lines intact’: Chan Chun Sing
Among other heavily-traded stocks, Singtel fell 3.7 per cent to S$2.32 after warning that it expects to record net exceptional losses of S$1.21 billion in its full-year results , mostly due to the impairment of assets and goodwill at two businesses.
MORE DOWNSIDE TO COME?
Moving forward, the number of unlinked community cases will likely play a part in determining how the stock market moves over the next two weeks, said CMC Markets analyst Kelvin Wong.
“If the number of unlinked community cases continues to be on the rise in the next two weeks, it implies that more stringent measures are likely to be implemented such as a ‘circuit breaker 2.0’,” he said.
“Thus, stocks that are geared towards hospitality and travel, such as Genting, SIA, CapitaLand Integrated Commercial Trust may see further declines.”
Mr Yeap also expects stocks related to the retail, hospitality and entertainment sectors to come under further pressure, given uncertainties about how the COVID-19 situation will evolve.
Investors may opt for a “risk-off approach” in the near term, he said, considering that the STI has had a strong run since the start of the year and “may be due for some profit-taking” given the current uncertainties.
“That said, the overall downside impact may be limited considering that prompt action was taken to limit the virus spread and more than 20 per cent of Singapore’s population has been fully vaccinated,” said the market analyst from IG.
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Download our app or subscribe to our Telegram channel for the latest updates on the coronavirus outbreak: https://cna.asia/telegram
Source: CNA/sk
Continue reading...