Singapore shares dip 0.1% as hopes fade over big Fed rate cut

DIMINISHED hopes for a sizeable interest rate cut by the US Federal Reserve at month's end continued to have an effect on most Asian equities, with the local market not spared.

The Straits Times Index (STI) edged down 4.77 points or 0.1 per cent to close at 3,329.46.

It was a mixed day for regional markets. Australia, China, Hong Kong and South Korea closed lower. Meanwhile, Japan and Malaysia ended higher.

"Markets remain cautious ahead of Humphrey Hawkins and the FOMC minutes which have notably weighed on risk assets in Asia today (Tuesday) as investors head for the sidelines ahead of a deluge of Fed policy signalling this week," Vanguard Markets managing partner Stephen Innes said.

On Tuesday's activity in Singapore, CMC Markets analyst Margaret Yang told The Business Times: "Profit-taking activities were accelerated by the fact that the fundamental outlook remains weak, in particular among the manufacturing and export sectors."

In Singapore, trading volume clocked in at 1.22 billion securities, just over the daily average in the first five months of 2019. However, total turnover came to S$1.15 billion, 10 per cent above the January-to-May daily average.

Across the market, decliners outpaced advancers 218 to 186. The benchmark index had 17 of the STI's 30 components trading in the red.

Thai Beverage stocks added 0.5 Singapore cent or 0.6 per cent to close at 87 cents on 27.6 million shares changing hands, the most among benchmark index components.

Market observers said last week that the food and beverage player could be a potential partner of Anheuser-Busch InBev's (AB InBev) Asia-Pacific unit after it lists in Hong Kong.

The local banks were mixed. DBS Group Holdings was S$0.05 or 0.2 per cent lower at S$25.32. Meanwhile, OCBC Bank added S$0.09 or 0.8 per cent at S$11.40 and United Overseas Bank closed at S$26.22, up S$0.15 or 0.6 per cent.

The shine seems to have come off most real estate investment trusts (Reits) in Singapore after rallying in weeks prior, thanks to expectations of dovish central banks and more recently, news that the Monetary Authority of Singapore was considering raising the current leverage limit for Reits.

At Tuesday's closing, the iEdge S-Reit 20 Index lost 24.19 points or 1.7 per cent to 1,445.77.

That said, CGS-CIMB remains "Overweight" on Reits but cautioned that investors should be selective when stock-picking.

The brokerage prefers "S-Reits with attractive valuations as well as the Reits with stock-specific catalysts". Its top picks include Suntec Reit (down S$0.03 or 1.5 per cent to S$1.95), Mapletree Commercial Trust (down S$0.04 or 1.9 per cent to S$2.05) and Keppel DC Reit (down S$0.05 or 2.9 per cent to S$1.67).