By Ishika Mookerjee
(Bloomberg) -- Singapore stocks have finally gained 20% from their March lows, as the city-state struggles to flatten the curve of the coronavirus pandemic amid the reopening of its economy.
The benchmark Straits Times Index advanced 3% as of 4:30 p.m. local time on Wednesday, its third straight day of gains. This will make it one of the last major country gauges in Asia to enter a technical bull market, several weeks after its regional peers beat it to the punch. Property and banking stocks have been among the strongest gainers in the past month.
As the pandemic pummels the trade-reliant economy, record-low valuations have drawn buyers to Singapore’s stock market over the past couple of months. Optimism has also been on the rise as the country emerged from a two-month lockdown on Tuesday, restarting 75% of its economy. Gross domestic product, however, is expected to shrink 4%-7% this year, its worst contraction since independence in 1965.
“Reopening optimism has largely been driving gains for the local index this week and the U.S.-China relations don’t seem to be in such a dire state,” said Jingyi Pan, market strategist at IG Asia Pte. The sentiment “will likely carry on in the short term, although Covid-19 related concerns will weigh on the market this year.”
The index plunged more than 30% from a January high to a March low, as virus concerns roiled equity markets and economies globally. That sent valuations to their lowest ever, and the measure now trades at 0.9 times estimated book value for the next year, data compiled by Bloomberg show.
The FTSE Bursa Malaysia KLCI Index was the last Asian gauge to enter bull market territory last week. Meanwhile, Hong Kong’s Hang Seng Index continues to be in bear market as investors grapple with China’s new national security law, rising U.S.-China trade tensions and ongoing protests.
Singapore now has one of the highest number of recorded infections in Asia, with more than 36,000 cases.
© 2020 Bloomberg L.P.