Singapore stocks near 4-year low as oil rout, COVID-19 fears send investors ‘dumping everything’

SINGAPORE: Singapore shares plunged to a near four-year low amid a major sell-off on Monday (Mar 9), mirroring the sea of red across Asian equity markets as investors rushed for the exits after a steep fall in oil prices and escalating concerns about the global spread of COVID-19.

Clocking losses for the third straight session, the benchmark Straits Times Index (STI) finished at 2,782.37 after diving 6.03 per cent or 178.61 points.

This is the STI’s lowest closing since June 2016 and its worst trading day since October 24, 2008, when it tumbled 8.3 per cent amid the global financial crisis.

Decliners trumped advancers 525 to 84 on Monday. All 30 of the STI’s constituents closed in the red.

“The market is in such a panic that investors are dumping everything. All they want now is cash,” said CMC Markets’ analyst Margaret Yang.

Monday’s market turmoil is fuelled by a free-fall in oil prices after Saudi Arabia, the world’s largest oil exporter, ended failed talks with Russia over supply cuts and announced massive discounts to its official selling prices, sparking fears of an all-out price war.

The kingdom, which currently pumps 9.7 million barrels per day, is also reportedly preparing to increase production above the 10 million barrel per day mark, according to a Reuters report.

READ: Saudi Aramco drops 10% after kingdom triggers oil price fall

READ: Oil crashes after Saudi Arabia starts price war amid slumping demand

This led oil prices to suffer a historic collapse of more than 30 per cent during Asian trade – the biggest fall since the beginning of the Gulf War in January 1991, said FXTM’s chief market strategist Hussein Sayed.

It has since pared losses, with US crude last seen about 20 per cent lower at US$33.38 per barrel as of 10.22 GMT on Monday. Brent, the global benchmark, last traded 18.2 per cent lower at $37.03 a barrel.

The latest shock to oil comes as a double blow for stock markets, which were already jittery over the global spread of COVID-19 to more than 100 countries.

Mr Paul Chew, head of research at Phillip Securities, said: “The collapse in oil price has further worsened sentiment … Covid-19 is still the key headline worry for the market as infections outside China are still rising.”

In Singapore, rig builder Keppel Corp tumbled 9.65 per cent or S$0.60 to S$5.62, its lowest since November 2016.

Fellow rig builder Sembcorp Industries dropped 9 per cent or S$0.16 to S$1.61, while its unit Sembcorp Marine plunged 11.39 per cent or S$0.12 to S$0.895. Both counters are at fresh record lows.

Banks were also among the main laggards on Monday – DBS closed down 8.04 per cent or S$1.85 to S$21.15; OCBC fell 6.76 per cent or S$0.69 to S$9.52 and UOB skidded 7.33 per cent or S$1.70 to S$21.50.

READ: Investor fears rise over recession, bear market as coronavirus spreads in US

READ: Dashboard of Japanese stocks with a stake in Olympics’ success

This as local banks face a myriad of headwinds, according to analysts. These include expectations for weaker US Fed rates to put a squeeze on the banks’ net interest margins, slower global growth to raise asset quality risks and slow down loan growth, as well as the possibility of heightened risk from its oil and gas exposure with the latest oil market turmoil.

“All these headwinds are coming at the same time so the banks are suffering from profit-taking activities,” said Ms Yang.

Overall, while the STI’s steep sell-off on Monday would “not be sustainable”, there is still “some weakness” in the market, she added. 

“Right now, investors are only looking at the negative news and they just want to take their money off the table,” Ms Yang told CNA.

“So I don’t think the market will bounce back quickly in the weeks to come.”

The rest of Asia were not spared from the double whammy of oil price rout and worries over the COVID-19 outbreak. 

Japan’s Nikkei 225 index dropped about 5 per cent and South Korea’s Kospi index lost 4.2 per cent.

China’s key Shanghai Composite Index closed down 3 per cent and Hong Kong’s Hang Seng Index was 4.2 per cent lower. 

In Australia, the S&P/ASX 200 index tanked 7.3 per cent.

All eyes are now on how the US stock markets fare overnight, said Ms Yang, after US stock futures fell 5 per cent and triggered a “circuit breaker” that halts trading to prevent further declines.