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EMERGING MARKETS-Singapore stocks sink to 2-month low; airline, banks dive

Rashmi Ashok
·3-min read

* Graphic: World FX rates http://tmsnrt.rs/2egbfVh * Graphic: Foreign flows into Asian stocks https://tmsnrt.rs/3f2vwbA * Singapore lenders slide, MAS asks banks to cap dividends * Singapore Airlines hits lowest since Aug. 1998 * Remote work, U.S.-China tech troubles to benefit Taiwan - ANZ By Rashmi Ashok July 30 (Reuters) - Singapore shares hit a two-month low on Thursday, hurt by a sell-off in banking stocks after the central bank asked lenders to cap dividends this year, denting the appeal of a sector favoured for steady payouts to shareholders. The FTSE Straits Times Index slid as much as 2.4%, after the Monetary Authority of Singapore (MAS) called on banks to cap 2020 total dividends at 60% of what they paid out last year as the city-state faces its deepest recession ever in the wake of the coronavirus pandemic that has roiled the global economy. Shares of top lenders hit their lowest in months, with DBS Group sliding 4.3%, OCBC skidding 5.5% and United Overseas Bank dropping 4.1%. According to Refinitiv Eikon data, the three banks have among the highest dividend yields on the index, ranging between 5.5% and 6.2% against the index's average of 4.7%. "Although this had perhaps been a milder recommendation compared to the European Central Bank's ... it would nevertheless diminish the attractiveness of the shares in the short term if adopted," wrote IG market strategist Jingyi Pan. Central banks across the world have either urged lenders to consider lowering dividends or put outright restrictions on what they can pay, in a bid to increase lending capacity and provide adequate capital buffers to deal with an expected spike in bad debts in the months ahead as economies soak up the impact of the coronavirus downturn. Elsewhere, Singapore Airlines stock also slid 5% - to its lowest since Aug. 27, 1998 - after it posted a S$1.12 billion ($817 million) first-quarter net loss and warned passenger capacity may still be less than half of pre-pandemic levels by March 2021. While most Asian currencies were little changed after Wednesday's U.S. Federal Reserve meeting, the Taiwan dollar was on course for a fourth straight session of gains, up 0.8%. Its stock market added more than 1% against broader regional declines. The island's markets are the region's second-best performers so far this year, benefiting from an increase in people working from home during the coronavirus pandemic which has sparked demand for laptops, tablets, and servers, boosting Taiwan's tech sector. "The tech sector is singularly driving Taiwan's export performance and is also the focus of the government's investment drive. As a result, we believe Taiwan's economy is weathering the pandemic better than its peers," wrote analysts at ANZ. "The U.S.-China tech decoupling could drive more flows into Taiwan, given its prominent role in Asia's tech supply chain," ANZ added. HIGHLIGHTS ** Indonesian 10-year benchmark yields were up 2 basis points at 6.846%​​ while 3-year benchmark yields rose 7.8 basis points at 5.404%​​ ** In the Philippines, top index losers were Robinsons Land Corp down 4.25% and Aboitiz Equity Ventures Inc down 1.92% ** Top gainers on the Thailand's SETI include Max Metal Corp PCL up 100% and Thai-German Products PCL up 16.67% Asia stock indexes and currencies at 0332 GMT COUNTRY FX RIC FX FX INDEX STOCKS STOCKS DAILY YTD % DAILY YTD % % % Japan -0.10 +3.42 0.05 -5.28 China <CNY=CFXS +0.06 -0.48 0.23 8.26 > India +0.00 -4.57 0.00 -7.94 Indonesia -0.55 -4.60 0.00 -18.86 Malaysia +0.02 -3.56 -0.47 0.95 Philippines -0.10 +3.22 -0.32 -23.91 S.Korea <KRW=KFTC +0.18 -2.90 0.27 3.26 > Singapore -0.11 -2.21 -1.37 -21.24 Taiwan +0.69 +2.75 1.05 5.64 Thailand +0.32 -4.59 0.47 -14.89 (Reporting by Rashmi Ashok in Bengaluru; Editing by Kenneth Maxwell)