Singapore STI extends tumble amid global market selloff

Singapore subway MRT escalator at One North; taken August 2018.Singapore MRT escalator at One North.

Singapore’s Straits Times Index tumbled in early trade on Thursday, shedding 2.45 percent to 3054.90 by 9:29 A.M. SGT, after dropping around 4 percent over the previous five sessions.

All 30 STI components were in the red.

Other regional markets also took a hit, with Japan’s Nikkei 225 index off 3.62 percent by 9:45 A.M. SGT, Hong Kong’s Hang Seng Index tumbling 2.96 percent by 9:47 A.M. SGT, China’s CSI 300 dropping 2.53 percent by 9:47 A.M. SGT and South Korea’s Kospi losing 2.79 percnet by 9:51 A.M. SGT.

Futures for the Dow Jones Industrial Average, the S&P 500 and the Nasdaq were all sharply in the red.

That was in the wake of a sharp selloff on Wall Street Wednesday, despite the lack of a clear, immediate cause.

DBS strategists also noted the lack of an obvious trigger to the correction, but pointed to warning signals.

“Trade war, rising oil prices, Trump’s stepped-up criticism of the Fed and emerging market worries form just part of the list of worries for the market,” Eugene Low, a rates strategist, and Philip Wee, a foreign exchange strategist, said in a DBS Group note on Thursday morning.

In the wake of Wall Street’s fall, U.S. President Trump issued another criticism of the U.S. Federal Reserve that before his time in office was unprecedented as central bank independence has long been considered vital to maintaining economic stability.

Trump reportedly called the Fed “crazy” for raising interest rates this year, appearing to blame the central bank for Wednesday’s stock market drop. After long touting stock market rises as evidence his policies were positive, Trump appeared to be trying to disengage from the blame for the drop.

“With U.S. yields elevated (by recent years’ standards) and the Fed communicating that further hikes are coming, doubts are building in risky assets,” the strategists said. “Emerging market and Asia assets would come under further pressure if U.S. equities sink further.”

While U.S. assets, especially the greenback and equities, have outperformed amid firm economic data, that divergence may have become too stretched, especially ahead of the U.S. mid-term elections in November, the note said.

The heavyweight banks tumbled, with UOB off 2.9 percent, DBS down 2.44 percent and OCBC falling 2.92 percent by 9:57 A.M. SGT.

Yangzijiang Shipbuilding, which is a beneficiary of a stronger dollar and may be hit as the greenback weakens, was off 3.20 percent by 9:57 A.M. SGT, while Venture, which has production in China, shed 4.66 percent.

The U.S. dollar index, which measures the greenback against a basket of currencies, was at 95.30 at 9:51 A.M. SGT, extending it tumble from 96.14 earlier this week.

HPH Trust, which operates port assets in China and Hong Kong and which could be in focus if the U.S. trade war hurts China’s output, shed 3.92 percent by 9:57 A.M. SGT.


Get the Shenton Wire morning briefing in your inbox