Local stocks closed higher yesterday, a day after the Government announced a $48 billion relief package to cushion the impact of the coronavirus pandemic.
The Straits Times Index (STI) had a strong opening before drifting lower, closing 1.66 per cent, or 41.2 points, higher at 2,528.76, and up 4.9 per cent for the week.
About 1.35 billion shares worth $1.92 billion changed hands, with gainers outpacing losers 329 to 147.
Genting Singapore was the most active counter, rising 8.13 per cent to 66.5 cents, as analysts estimated that Resorts World Sentosa would reap cost savings of between $70 million and $180 million from wage support and property-tax rebates.
Singapore Airlines was the biggest loser, down 6.46 per cent to $6.08, after announcing a $8.8 billion cash call, including issuing $3.5 billion in mandatory convertible bonds.
Maybank Kim Eng wrote: "The capital raising came as no surprise and should help shore up SIA's cash-flow position, while enabling it to meet its ongoing commitment despite a significant decline in passenger revenue. However, the massive mandatory convertible bonds will create a formidable overhang on the stock for years to come."
Jardine Matheson was the top gainer, up 2.61 per cent to US$48.74.
Analysts noted that the Government's stimulus package was larger than expected - double the $20.5 billion disbursed during the 2009 global financial crisis and much greater than the $230 million it pumped in during the severe acute respiratory syndrome (Sars) epidemic in 2003.
But a recession remains inevitable and firms such as SIA will still suffer from severe capacity cuts.
CGS-CIMB analyst Lim Siew Khee said yesterday: "We keep our estimate of a 13 per cent year-on-year decline in market earnings for 2020, but further cut our 2020 STI target to 2,050 (from 2,595). We keep the view of any near-term rebound as a selling opportunity."
Citi analyst Patrick Yau noted that the STI now trades at 0.8 times book, below levels seen during the global financial crisis and Sars, with consensus pricing in a 7 per cent fall in earnings this year.
He expects more downside as investors adjust to the idea that the economic slowdown from virus containment measures will drag out until the end of the year, instead of a quick hit over one quarter.
He said: "During Sars, there were double infection peaks with three phases of 10 per cent to 15 per cent STI volatility as cases and fear spread."
Regional markets also closed higher yesterday.
