Straits Times Index pares losses amid China virus outbreak

The Straits Times Index (STI), Singapore’s benchmark index, today reversed big losses that were made at the start of this week, as panic surrounding the China coronavirus began to subside.

The index was able to stop the bleeding slightly on Wednesday (22 January), rising 0.35% throughout the day to move back above 3,256.600 points.

Top blue-chip gainers of the day include: CapitaLand Limited, which pared losses by 1.56%; Singapore International Airlines with a 1.58% gain; Singapore Press Holdings recovering almost two percent in value; Singapore Telecommunications (SingTel) with a plus of 0.7%; and Oversea-Chinese Banking Corp (OCBC) on 0.72%

Chang Beer-manufacturer Thai Beverage, the Singapore Exchange's most active counter by far, recorded the biggest loss of the day as it tumbled a further 1.84% to finish Wednesday’s market.

Commercial real estate trust Mapletree Logistics Trust was also unable to recover, losing an extra 1.65% for the day.

Tumultuous Tuesday

However, this still pales in comparison to the two-month high of 3,281.03 that it managed to hit on Monday (20 January) morning.

On Tuesday, the benchmark crashed by nearly 50 points (1.4%), after Chinese authorities confirmed that the new virus, which originated in the city of Wuhan, can be spread through human contact.

Top losers on Tuesday included: Thai Beverage, which nosedived 4.12%, Yangzijiang Shipbuilding with losses of 3.51%, Wilmar International at 2.57%, City Development (2.29), Singapore Airlines descending two percent, and CapitaLand lowered by 1.79%.

Meanwhile, other blue-chips were also hit, albeit with less impact: SingTel, which dipped 0.91%, CapitaLand Mall Trust, which dropped 0.77%, United Overseas Bank with 0.64% less, OCBC traded down 0.45%, and DBS Group with a more manageable 0.30% loss.

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Outbreak had triggered risk-off mood

Apart from China – which has confirmed over 400 cases of the virus, other countries that have reported cases include Thailand, South Korea, Japan, Taiwan, and the US.

The outbreak had triggered a risk-off sentiment across most Asian markets, with the Hang Seng Index, Nikkei 225 Index, and Shanghai Composite Index plummeting 4.2%, 1.12%, and 2.84% respectively.

The outbreak “is developing into a major potential economic risk to the Asia-Pacific region,” said Executive Director and Asia-Pacific Chief Economist, IHS Markit, earlier in a report.

Concerns over the spread of the virus was the ‘predominant mover’ across the markets this week, said Linus Loo, head of research at Lim & Tan Securities. ‘Unfortunately, it's coming at a bad time, just ahead of the travel-heavy New Year week.’

Although the contagion is reminding some market observers of the 2003 SARS virus, Wells Fargo Investment Institute senior global market strategist Sameer Samana, said there’s no need to panic yet.

‘History tells us that most of these situations can be contained. What we would watch for is does it become a big enough issue that it actually starts to change consumer behavior?’ he told Bloomberg.

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