Asian stocks down after FOMC meeting
US dollar surges as Fed shows commitment to tighten monetary policy in a bid to keep the economy steady
Asian equities took on a weaker tone yesterday, following a muted close on Wall Street overnight.
This comes after minutes from the latest Federal Open Market Committe meeting leaned towards a more hawkish tone, with the Fed showing a commitment to tighten monetary policy in a bid to keep the economy steady.
The US Treasury also refrained from naming China as a currency manipulator, averting a further escalation of the US-Sino trade war. The US dollar surged on Fed optimism.
Economists from Manulife Asset Management noted that while the recent equities selloff has dominated headlines, evidence points towards a "temporary correction".
"Some of the drop is justified by fundamentals, but economic fundamentals are still sound: many of the factors that drove economic growth are still here, and some of it is an overreaction, mostly due to the correction happening in the US."
On the local bourse, Singapore stocks closed flat, with the Straits Times Index retreating 1.43 points or 0.05 per cent to close at 3,069.67. Decliners outnumbered gainers 208 to 152, after about 1.98 billion shares worth S$927.5 million changed hands.
RHB analyst Jarick Seet noted that it was generally quite a "slack day", as macro uncertainties continue to weigh down on the market, and investors attempt to see how the US market might pan out.
But what stole the show were property stocks, which took a beating after the Urban Redevelopment Authority said it plans to crack down on the number of "shoe-box" apartments, alongside other cooling measures.
Among the hardest hit were UOL Group, City Developments Limited (CDL), and Ho Bee Land, which all fell about 1.6 per cent each. Meanwhile, Bukit Sembawang and GuocoLand both lost 0.5 per cent.
Financials also drifted lower, with UOB, DBS and OCBC tumbling 0.6 per cent across the board.
In a research report earlier this week, CGS-CIMB maintained its "neutral" rating on the Singapore property sector, adding that it prefers diversified developers such as UOL, CDL and Ho Bee Land.
Separately, DBS analysts Derek Tan and Rachel Tan noted that the latest restrictions would pose a further headwind for developers, and represent a "final nail in the coffin for the en-bloc market".
The analysts expect land prices to drop by as much as 20 to 40 per cent, with homebuyers likely to hold back purchases to next year, if they can, as most adopt a wait-and-see attitude.
Though the analysts expect developers' share prices to remain under pressure in the immediate term, they have a preference for diversified plays such as CapitaLand and Frasers Property Limited. Both counters ended flat yesterday.
Among the active index stocks, Genting Singapore gained 0.5 per cent to S$0.95 with 39.5 million shares traded, while YZJ Shipbuilding was up 4.6 per cent to S$1.37, with 34.9 million shares traded. StarhHub also added 2.6 per cent, and Venture Corp inched up 0.2 per cent. Noble, lost 4.4 per cent to close at S$0.109 apiece.
With the exception of Australia, the rest of Asia also struggled. Hong Kong's Hang Seng ended flat as investors returned from a one-day holiday, while the Shanghai Composite tumbled 2.9 per cent to 2,486.42, recording its lowest level in almost four years.
For full listings of SGX prices, go to http://btd.sg/BTmkts
Get The New Paper on your phone with the free TNP app. Download from the Apple App Store or Google Play Store now
