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STI slips back into the red as Singapore economy plunges in 1Q

Thiveyen Kathirrasan
Thiveyen Kathirrasan • 3 min read
STI slips back into the red as Singapore economy plunges in 1Q
The benchmark STI turns cautious, as Singapore reports the biggest quarterly contraction in a decade.
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SINGAPORE (Mar 26): After a two-day rally, the benchmark Straits Times Index (STI) dipped 0.22% on Thursday morning, as Singapore waits with bated breath for the unveiling of a second stimulus package later in the afternoon.

The Resilience Budget announcement will come amid the biggest contraction in Singapore’s economy in a decade.

For 1Q2020, gross domestic product fell 2.2% year-on-year, faring worse than the median forecast of a 1.4% decline in a Bloomberg survey of economists.

On an annualised quarter-on-quarter basis, 1Q GDP fell 10.6% from the previous three months, missing the median forecast of an 8.2% decline.

The short-lived rebound had come after the US Federal Reserve swooped in with a sweeping rescue plan to shelter the economy from the coronavirus.

See: As Congress bickers, Fed swoops in – controversially – with sweeping rescue plan

On the local front, the government announced Monday evening that Deputy Prime Minister and Minister for Finance, Heng Swee Keat, will deliver a Ministerial Statement on March 26.

This will detail additional support measures for workers, businesses and households in response to the Covid-19 pandemic.

The DPM, as well as Prime Minister Lee Hsien Loong, had earlier hinted at a second stimulus package – a shot in the arm for workers and small- and medium-sized enterprises (SMEs) badly affected by the virus-led downturn.

See: Singapore SMEs, workers could get more help amid coronavirus woes as government mulls 2nd stimulus package

See: 'We are SG United': PM Lee rallies Singaporeans to stand together against Covid-19 pandemic

President Halimah Yacob had also weighed in, saying the city state could consider tapping its national reserves to fund a second economic package to weather the impact of the coronavirus pandemic on businesses and workers.

It would be the first such move to bankroll economic stimulus since 2009, when the global financial crisis rocked the Asian financial hub.

See: Singapore weighs tapping reserves for virus fight in rare move

Over the past two weeks, companies on the Singapore Exchange (SGX) had already found themselves battered relentlessly, on the back of fears of a prolonged coronavirus pandemic.

Notably, a surprise decision by the US Federal Reserve on March 15 to slash interest rates had failed to calm the global financial markets. But now, more central banks have joined in with moves to ease liquidity.

Investors had started fleeing for cover after the World Health Organization on March 11 declared the novel coronavirus (Covid-19) outbreak a pandemic.

Amid the uncertainty stemming from Covid-19 as well as other geopolitical events such as the Saudi-led oil price war which saw the collapse of oil prices on March 9, The Edge Singapore is keeping track of the component stocks on STI, a capitalisation-weighted stock market index that tracks the performance of the top 30 companies listed on the SGX.

This valuation table will be updated at noon each day.

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