STI: Oil-related stocks hit hardest amid price war

Singapore equities faced strong sell-offs yesterday as fears continue to escalate over the coronavirus but oil-related stocks were hit hardest after sharp falls in oil prices.

The Organisation of the Petroleum Exporting Countries and Russia failed to agree to an output cut, sparking a price war with Saudi Arabia subscribing to its largest price cuts in two decades.

Crude benchmarks – West Texas Intermediate and Brent – were down by as much as 31.5 per cent during the Asian session. Their deepest slides since 1991 set the stage for a dismal session for oil-related counters in the local market.

In Singapore, Keppel Corp slumped 9.6 per cent to $5.62, its lowest since late November 2016.

Fellow rig builder Sembcorp Industries shed 9 per cent to $1.61, while its unit Sembcorp Marine plunged 11.4 per cent to 89.5 cents. Jet fuel trader China Aviation Oil dropped 9.3 per cent to $0.98.

Among upstream oil and gas counters, Rex International lost 28.8 per cent to 12.6 cents with 130.6 million shares changing hands, the most on the Singapore bourse.

GSS Energy skidded 20.3 per cent to 5.9 cents, while AusGroup fell 27.8 per cent to 2.6 cents.

The combination of the possibility of a coronavirus epidemic and the shock in oil markets saw the Straits Times Index register its biggest single-day loss since October 2008. It lost 178.61 points or 6 per cent to 2,782.37, with all 30 of its components ending in the red in a session that one trader observed as “rife with indiscriminate selling”.

Singapore banks continued to extend their 52-week lows. DBS shares fell 8 per cent to $21.15; OCBC Bank lost 6.8 per cent to $9.52 while United Overseas Bank closed at $21.50, down 7.3 per cent.

Real estate investment trusts (Reits) – last week’s outperformers – also faced sell-offs. Among them, Ascendas Reit fell 3.6 per cent to $3.26 and CapitaLand Commercial Trust lost 3 per cent to $1.95.

Trading volume in Singapore was 2.19 billion securities, while total turnover came to $2.64 billion. Across the broader market, decliners trumped advancers 525 to 84.

Elsewhere in the region, benchmarks in Australia, China, Hong Kong, Japan, Malaysia, South Korea and Taiwan registered heavy losses.

Sell-offs could continue in the coming days. “The market continues to be fear-and headline-driven, and it is difficult to imagine a durable and broad-based recovery in risk sentiments soon,” said Mizuho Bank head of economics and strategy Vishnu Varathan.

 

News Source: Link

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