STI dips as growth concerns eclipse Budget

Local shares beat a slight retreat yesterday as the post-Budget euphoria began to wane and concerns over global growth resurfaced.

The benchmark Straits Times Index (STI) closed down 0.47 per cent, or 15.03 points, to 3,198.68, with gainers and losers evenly matched at 203.

"With the Covid-19 outbreak remaining very much in the news, global trade and growth are the immediate concerns. Singapore's Budget has taken a backseat," said a remisier yesterday.

Apart from a brief initial knee-jerk reaction on Wednesday, Singapore's most expansionary Budget in more than two decades has been a non-event for the local market.

Standard Chartered has lowered its global growth forecast this year to 3 per cent from 3.2 per cent, primarily driven by its revisions to China. "We downgraded our China 2020 GDP growth forecast to 5.5 per cent from 5.8 per cent," its economists said, adding that this would be the slowest pace of growth since the 2008 global financial crisis.

"Our core scenario is that the coronavirus will be contained by late-March, paving the way for a second-quarter recovery," they added.

The main uncertainty remains the virus situation around Asia and the rest of the world. While monetary and fiscal policy is expected to cushion the impact, it cannot fully compensate for the "deadweight loss to growth likely in (this quarter)".

DBS equity research team analyst Yeo Kee Yan reckoned Singapore's measures to fight the outbreak could start showing their effectiveness by the end of this month.

"At this rate, we think Chinese factories can even return to normalcy by end of (this quarter) and factories could well make up for the lost time by ramping up production," the DBS analyst said.

Until then, expect the local market to move within a tight band on continued profit-taking and playing on dips in sRead More – Source