Singapore shares tumble amid concerns over Italy, bank earnings, China trade

Singapore two-dollar bills

Singapore’s shares tumbled on Wednesday, hit by a combination of concerns over Italian political turmoil, U.S. bank earnings and U.S.-China trade disputes.

The Straits Times Index was down 1.82 percent at 3454.29 at 14:19 SGT, off an earlier low of 3437.12.

Italy may be pushed into another election by July as parliament could soon be dissolved after inconclusive elections in March have failed to result in a government. Analysts believe the upcoming election could turn into a referendum on the euro, with repercussions extending beyond the previous market-wrenching possibility of Greece exiting the eurozone.

But Wall Street futures have turned higher, suggesting the selloff might not be persistent. The U.S. dollar index, which measures the greenback against a basket of currencies, also backed off of earlier highs, trading around 94.71 at 14:48 SGT, after climbing as high as 94.97 earlier.

Singapore’s heavily weighted banks were among the biggest decliners on the STI. DBS was off 2.95 percent, UOB shed 2.73 percent and OCBC fell 3.16 percent by 14:39 SGT.

That was in the wake of a selloff in banks on Wall Street after the head of JPMorgan’s corporate and investment bank, Daniel Pinto, reportedly said second quarter revenue may be flat on-year.

Starhub also dropped 2.86 percent by 14:42, while Hutchison Port Holdings Trust, or HPHT, shed 4.69 percent; both shares will be removed from the MSCI Singapore Index at the end of the month.

HPHT may also be facing additional pressure from concerns the U.S. may resume its trade war against China sooner than expected. The White House appears to have reneged on its plan to put the U.S.-China trade war “on hold,” saying it plans to announce a list of US$50 billion worth of Chinese goods to target with 25 percent tariffs by June 15, with the tariffs coming soon afterward.

Starhub may face additional pressure after a Straits Times report that as many as 11 Discovery brand channels could be dropped from its cable service by the end of August, including Animal Planet, the Asian Food Channel and the Food Network. Discovery said that Starhub was “not prepared to pay fair value,” while Starhub said negotiations were continuing but it was working to acquire fresh content, the report said.

Shares of SGX were down 1.63 percent at 14:52 SGT after Singapore Exchange said on Tuesday it would delay the launch of its Indian derivative successor products to the SGX NIfty product family amid a legal challenge in India. In a note in February, Goldman Sachs estimated that 10 percent of SGX’s derivatives business revenue comes from the Nifty F&O and rupee futures, which are its two key India offerings.

Bucking the trend, shares of Golden Agri-Resources climbed 3.28 percent to S$0.315 by 14:50 SGT, of an earlier high of S$0.325, after several large trades pushed up volume.

This article was originally published on Wednesday, 30 May 2018 at 14:58 SGT; it has since been updated.