SINGAPORE shares fell at the end of trading on Thursday (Dec 19), with the Straits Times Index (STI) tracking Asian indices after the US Federal Reserve signalled fewer interest rate cuts next year.
The STI fell 0.4 per cent or 16.74 points to 3,762.88. Across the broader market, losers outnumbered gainers 340 to 176, after 1.2 billion securities worth S$1.3 billion changed hands.
The trio of local banks had mixed performances. DBS was up 0.07 per cent or S$0.03 at S$43.40. UOB also closed 0.2 per cent or S$0.09 higher at S$36.54, while OCBC fell 0.9 per cent or S$0.15 to S$16.68.
The top gainer was Yangzijiang Shipbuilding, rising 2.8 per cent or S$0.08 to S$2.89. The biggest loser was CapitaLand Investment, down 1.9 per cent or S$0.05 at S$2.56.
Major indices were down across the region. The Kospi fell 2 per cent while the Nikkei 225 closed 0.7 per cent lower. Hong Kong’s Hang Seng Index declined 0.6 per cent and the FTSE Bursa Malaysia KLCI closed almost flat.
The US Federal Reserve had announced that it cut its benchmark interest rate by a quarter point, but also slashed the number of 2025 rate cuts in its forecast from four to two. Analysts, however, remained optimistic on the outlook for both Singapore and Asia markets.
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“We maintain that the timing and size of the US Fed’s interest rate decreases, as well as the prospects for global economic growth, will have a stronger influence on Singapore’s equities market,” RHB said in a note before the Fed decision.
“Although the easing of the interest rate cycle should ideally be negative for banks – as we expect global and Singapore economic growth to remain positive – the impact of the easing cycle should be manageable for local banks,” it added.
Singapore real estate investment trusts (S-Reits) fell sharply on Thursday despite the rate cut. Mapletree Industrial Trust, Frasers Hospitality Trust, and Acrophyte Hospitality Trust were among the biggest decliners falling between 1.8 and 2 per cent at trading close.
RHB said that investors should gradually build positions in the Reits sector as interest rates are expected to eventually decline.
“Looking ahead to 2025, we expect a better year for S-Reits compared to 2024, as interest rates have started to descend from their peaks coupled with steady economic growth.
“Nonetheless, we expect some volatility and short-term fluctuations in share prices during the course of the year, resulting from political and policy uncertainties,” said RHB. “We expect the S-Reit sector’s DPU (distribution per unit) growth to turn positive (rising 2.7 per cent year on year) in 2025.”
