Straits Times Index closes lower despite fourth Covid-19 budget worth S$33 bn

Singapore blue-chip equity barometer Straits Times Index (STI Index) edged lower on Tuesday 26 May 2020, after the Singapore government announced a fourth Covid-19 fiscal stimulus.

The benchmark fell 0.2% to close at 2533 points, based on IG trading data. On an intra-day basis, the STI Index is up roughly 0.7%.

Read also: Top 5 performing Singapore Exchange (SGX) stocks of the week

Singapore government unveils S$33 billion ‘Fortitude Budget’

Singapore Deputy Prime Minister and Finance Minister Heng Swee Keat unveiled the Fortitude Budget on Tuesday, with job support as the central theme.

An estimated S$33 billion will be set aside in this latest package particularly to further strengthen support businesses in the areas of ‘cash flow, costs and credit’, he said.

Some highlights in the Fortitude Budget include:

• Jobs Support Scheme to be extended by one month for all firms
• Firms that cannot resume operations on 02 June will continue to get 75% of wage support until August 2020, or when they are allowed to reopen
• Foreign worker levy waiver and rebate extended for up to two months for businesses not allowed to resume on-site operations
• S$2 billion worth of cash grants to be provided to offset rental costs of SME tenants
• SGUnited Jobs and Skills Package to create close to 100,000 jobs, traineeships and skills training courses

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Nearly S$100 billion of stimulus introduced in 2020

This latest budget brings the total amount of stimulus introduced by the Singapore government since the outbreak of Covid-19 to nearly S$100 billion, or 19.2% of the country’s Gross Domestic Product (GDP).

Mr Heng added that the overall budget deficit for FY2020 will grow to S$74.3 billion – the largest in the country’s history since independence.

The budget unveil also follows from the Ministry of Trade and Industry’s forecast downgrade earlier today from ‘minus 4% to minus 1%’ to ‘minus 7% to minus 4%’.

STI Index’s top gainers and losers on Tuesday

Among the top gainers on the STI Index on Tuesday are Jardine Cycle & Carriage (+7.8% in share price), City Developments (+3.7% in share price) and Ascendas REIT (+3.4% in share price). Top losers include Dairy Farm International (-3.5% in share price) and Sembcorp Industries (-2.0% in share price).

Last week, the STI declined 3.2%, amid uncertain coronavirus vaccine outcomes and the implementation of a new security law in Hong Kong by the Chinese government. Top earners – see the full list here, included SATS and ComfortDelGro.

The SGD had also fallen against the USD in exchange rate in light of the unpredictability.

So far this year, the STI is down 719 points, or 22.1%, with most of the drop having occurred during March 2020’s Covid-19 driven stock market crash. Since then, the index has recovered some 13.4%.

How to trade Singapore shares with IG

Are you bullish or bearish on Ascendas REIT, SATS, ComfortDelGro and other Straits Times Index (STI Index) stocks? Either way you can buy (long) or sell (short) the asset using derivatives like CFDs (read about CFDs here) in a few easy steps:

1. Create a live or demo IG Trading Account or log in to your existing account
2. Enter <company name> or <ticket code> in the search bar and select it
3. Choose your position size
4. Click on ‘buy’ or ‘sell’ in the deal ticket
5. Confirm the trade