Escalated Trump-Fed tensions jolt markets; STI down 0.3%

SINGAPORE – The local bourse closed lower on Aug 26 amid a regional sell-off triggered by US President Donald Trump’s unprecedented dismissal of Federal Reserve official Lisa Cook. The benchmark Straits Times Index (STI) dropped 0.3 per cent or 12.78 points to 4,243.71. Across the broader market, decliners outnumbered advancers 299 to 243, after 1.6 billion securities worth $2 billion changed hands.

Regional bourses were deep in negative territory. Japan’s Nikkei 225 was down 1 per cent, Hong Kong’s Hang Seng Index dropped 1.2 per cent and South Korea’s Kospi fell 1 per cent.

Nonetheless, the Singapore market’s defensive strengths came into focus as an upgrade by Julius Baer highlighted the mainboard’s attractive yields, reasonable valuations and the Singapore dollar’s safe-haven status, justifying a new “overweight” rating for SGX equities.

“We have turned positive on Singaporean equities after waiting for two years,” wrote Julius Baer’s equity research analyst of Asia Jen-Ai Chua in a note on Aug 26.

“In a world of increasing geopolitical uncertainty, we believe that the Singaporean market warrants a second look, given its defensive income attributes, reputation for good governance, and the Singapore dollar’s longstanding track record of strength and stability.”

Ms Chua highlighted that the mainboard posted year-to-date price returns of 12.5 per cent in local-currency terms and 20 per cent in US-dollar terms, remaining strong since its historic high in July.

“If dividends are included, total returns swell to 17 per cent and 25 per cent in local- and US-dollar terms respectively, making it the best-performing market in South-east Asia,” added Ms Chua.

Meanwhile, as Mr Trump’s threat to Fed’s independence put the greenback under pressure, the Singapore dollar has emerged as a safer alternative.

“As Singapore is the only Asian country with triple-A ratings from all three major credit rating agencies, the Singapore dollar has served as Asia’s go-to safe haven during crisis periods like the Asian financial crisis, global financial crisis and Covid-19, and warrants a closer look by investors reconsidering their exposure to the US dollar,” said Ms Chua.

On the STI, Singtel was the top gainer, up 2.1 per cent, or nine cents, at $4.34. SGX Group was at the bottom of the list, down 2.5 per cent, or 41 cents, at $16.33 on a cum-dividend basis.

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