STI registers first gain in five sessions, up 0.4% on Tuesday

SINGAPORE equities registered their first positive closing in five sessions as sentiment improved due to expectations of support measures by central banks to curb the economic fallout from the Covid-19 outbreak.

On Tuesday, the Straits Times Index (STI) ended 11.84 points or 0.4 per cent higher at 3,019.56.

Elsewhere in the Asia-Pacific, benchmarks in Australia, China, Hong Kong, Malaysia, South Korea and Taiwan also finished with gains. Bucking the trend was Japan, which closed lower.

Asian stocks got a bright start to Tuesday following a strong overnight performance on Wall Street.

Vishnu Varathan, Mizuho Bank's head of economics and strategy for the Asia and Oceania treasury, noted that the "distinct 'risk on' mood in markets" was being driven by investors mooting for a coordinated response by G-7 central bankers against the spread of the coronavirus.

However, most early gains were given up after Reuters reported the meeting might not yield practical measures.

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As it stands, central banks have already showed their willingness to lower rates to support the economy, with Australia's and Malaysia's the latest to join the fray on Tuesday. Over the weekend, US Federal Reserve chair Jerome Powell indicated that Covid-19 is posing evolving risks to economic activity, raising hopes of an interest rate cut this month.

Performance of equities this week suggests that the "Fed is effectively cornered by market expectations", said OCBC chief economist Selena Ling. As such, Ms Ling noted the Fed has to deliver a 50 basis point cut in March and a further 25 basis point cut in April "to avoid further market angst".

Trading volume in Singapore was 1.78 billion securities while total turnover came to S$1.83 billion.

Across the broader market, advancers outpaced decliners 244 to 214. Eleven of the blue-chip index's 30 components ended in the red.

Bets on a Fed rate cut saw real estate investment trusts (Reits), often billed as key beneficiaries of reduced borrowing costs, among the best performing counters of the day. 

Ascendas Reit was the STI's most active counter. Singapore's largest industrial Reit closed S$0.09 or 2.9 per cent up at S$3.20 with 38.6 million units changing hands. Meanwhile, Mapletree Industrial Trust (MIT) added S$0.05 or 1.8 per cent to S$2.79 and ESR Reit edged up 0.5 Singapore cent or 0.9 per cent to 53.5 cents.

In the current climate, Citi Research analysts are favouring industrial property trusts like Ascendas Reit, MIT and ESR Reit for their "resilient income streams, well-diversified portfolio and sizeable sponsor pipeline".

While markets have broadly rebounded after last week's dismal showing, Citi Research views "any short-term bounce in relatively less resilient Reits (hospitality and retail) as technical, rather than a sustained recovery".

Shares in Singapore Airlines continued to fall, closing S$0.05 or 0.6 per cent lower at S$8.10 after its regional arm SilkAir indefinitely suspended flights to Hiroshima from March 27 due to weak demand. The national carrier is trading at near 11-year lows.

Among pennies, Nam Cheong Limited added 0.1 Singapore cent to close at 0.8 cent after the Malaysian offshore vessel builder revealed it has won chartering contracts for six offshore support vessels worth RM116.4 million (S$38.5 million).