STI's losing streak runs into 7th day, falls 4.7% on Thursday

Singapore's Straits Times Index (STI) extended its losing streak to seven on Thursday, after stimulus measures announced by the European Central Bank (ECB) failed to lift sentiment as the global economy stares down the prospect of a Covid-19 induced recession.

US futures reacted positively following the ECB announcement, but their gains were wiped out by the time trading in Singapore commenced. The STI was down 0.5 per cent at the opening bell, but sell-offs intensified by mid-morning as investors rushed to liquidate their assets.

The blue-chip index closed 114.62 points or 4.7 per cent lower at 2,311.00. Twenty-eight of the STI's 30 counters finished with losses.

Margaret Yang, market analyst at CMC Markets pointed out that given that  "Singapore is highly susceptible to external shock in terms of broad macro environment and stock market performance", US markets will need to stop "bleeding" before the local market can reach a bottom.

Disruptions to global trade and investment have also resulted in fears of a first recession in over a decade. DBS economist Irvin Seah said: "A recession in Singapore appears inevitable, and we have revised our full-year gross domestic product growth forecast for 2020 to -0.5 per cent to reflect the recession scenario. Note that this comes with significant downside risks should the outbreak worsen."

With more trade restrictions kicking in globally, the STI's aviation-related counters continued to take a beating. Singapore Airlines lost S$0.41 or 6.3 per cent to S$6.12, and SATS shed S$0.25 or 8 per cent to S$2.87. Both are at multi-year lows.

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On Thursday, DBS Group Research has downgraded SATS to "fully valued", a call that implies an expected negative total return of more than 10 per cent over the next 12 months. DBS analysts lowered the target price for SATS to S$2.66 to factor in further downside to earnings as more countries place travel restrictions.

FY2021-2022 earnings forecasts for the ground handler were slashed by 23-25 per cent on lower throughput levels at Changi Airport, and lower performance from its Japan businesses and regional associates.

Real estate investment trusts (Reits) continued to be sold off by investors - even as some are already trading at all-time lows.

That said, the sole gainer in the asset class was Lendlease Reit, which added S$0.03 or 5.6 per cent to 56.5 cents. DBS Group Research analyst Derek Tan pointed out on Wednesday that the retail Reit was trading at "attractive re-entry levels after the recent 45 per cent crash".

Yangzijiang Shipbuilding continued to move against the grain of the market since securing a contract for 10 vessels on Monday. Shares in China's largest non-state shipbuilder closed S$0.03 or 3.8 per cent up at S$0.82 and are up 3.1 per cent on the week.

Trading volume in Singapore was 2.09 billion securities; total turnover was S$2.46 billion. Across the broader market, decliners trumped advancers 448 to 116.

Elsewhere in the Asia-Pacific, equity benchmarks were similarly battered, with Australia, China, Hong Kong, Japan, Malaysia, the Philippines, South Korea and Thailand decidedly lower.