Singapore overtakes Thailand as Asia’s worst equity market this year, as the city-state’s stocks continued south on Friday (30 Oct) amid the uncertainties over the United States presidential election and the worsening pandemic in the West.
Bloomberg reported that The Straits Times Index was down about 1 per cent today, bringing this year’s decline to 25 per cent so far, as compared to a fractionally smaller loss for Thailand’s SET index.
Singapore’s export-dependent gauge dropped 4.3 per cent this week, which is among the region’s worst performances.
It was reported that the nation’s stocks recovery was hampered by the economy’s integration with global trade and supply chains, and a lack of technology shares in the index. Over 80 per cent of Singapore’s benchmark comprised of cyclical equities.
“Singapore is particularly sensitive to global risk-off sentiment, and risk appetite has worsened from the resurgence in virus cases and expectations of a slow pace of economic recovery,” said Jingyi Pan, a strategist at IG Asia Pte.
“Some of the virus-affected regions are Singapore’s key trading partners,” she added.
The worst-performing stocks in the index were Singapore Airlines Ltd and ComfortDelGro Corp, which dropped 46 per cent and 42 per cent respectively.
Valuations are proving attractive for some, however, as the Straits Times Index trades at 13 times forecast earnings for the next year, in line with its 10-year average.
The MSCI Asia Pacific Index, on the other hand, is trading at a multiple of 16 times which is higher than its historical average of 13 times.
Despite that, the index’s recovery has some way to go as investors await a stimulus package in the US, said DailyFX’s analyst Daniel Dubrovsky.
“The Senate is off for recess until later next month without a fiscal package, crushing hopes of an economic boost, which will keep the Singapore gauge under pressure,” he added.