Straits Times Index Ends Flat Amid Global Market Declines
Singapore stocks managed to recover from earlier losses, closing nearly unchanged on Thursday (Sep 22), even as most Asian markets and Wall Street faced sharp declines following the US Federal Reserve’s latest rate hike and hawkish outlook.
The Straits Times Index (STI) edged up 0.04%, finishing at 3,263.07, after dipping as much as 0.39% during the morning session. Trading activity saw 1.02 billion securities worth S$1.09 billion change hands, with 257 losers outnumbering 230 gainers.
Banking Stocks and REITs Show Mixed Performance
Banking stocks were heavily traded, with DBS closing nearly unchanged at S$33.52, OCBC slipping 0.32% to S$12.31, and UOB declining 0.54% to S$27.53. Real estate investment trusts (REITs), sensitive to interest rate shifts, also displayed mixed results: Ascendas REIT gained 0.36%, while Mapletree Logistics Trust and Suntec REIT fell around 0.6% each.
Meanwhile, SATS shares plunged 5.13% to S$3.88 after the inflight caterer revealed discussions to acquire Worldwide Flight Services, though no terms or agreements have been finalised.
Regional Markets Hit Hard Amid Rate Hikes
Across Asia, markets struggled. Japan’s Nikkei 225 dropped 0.58%, South Korea’s Kospi closed down 0.63%, and Hong Kong’s Hang Seng Index plunged 1.61% after the city’s monetary authority mirrored the Fed’s 75-basis-point hike. The Philippine stock market declined 0.63%, while Indonesia’s Jakarta Composite Index bucked the trend, gaining 0.43%.
The Fed’s aggressive policy moves also propelled the US dollar to a 20-year high, with the Singapore dollar dipping as low as 1.4203 per US dollar before recovering slightly.
Global Economic Outlook Darkens
The Fed’s third consecutive 0.75-percentage-point rate hike on Wednesday signalled a more extended tightening cycle, projecting higher interest rates through 2023 and 2024. Analysts warned of increased recession risks as inflation remains stubbornly high.
TD Ameritrade Singapore CEO Greg Baker highlighted that sustained rate hikes, coupled with energy crises in Europe and geopolitical tensions, could push the global economy toward a recession within a year.
Implications for Singaporeans
OCBC economist Selena Ling cautioned that rising Singapore-dollar interest rates could drive up mortgage and refinancing costs for homeowners and businesses. Investors are advised to adopt a defensive asset allocation strategy, focusing on long-term resilience and diversification to navigate ongoing market volatility.
