SINGAPORE: Singapore stocks tumbled, with the benchmark Straits Times Index posting its biggest decline in almost four years amid concerns China’s currency devaluation will hurt bank earnings and slow economic growth.
The Straits Times Index sank 2.9 percent to 3,061.49 at the close of trading in Singapore. DBS Group Holdings Ltd., Oversea-Chinese Banking Corp. and United Overseas Bank Ltd., the nation’s three key lenders, each slumped at least 4 percent and were the biggest contributors to the benchmark’s decline.
Singapore banks have been making inroads into China and the People’s Bank of China’s move to devalue its currency will hurt their earnings, according to Daiwa Securities Group Inc. China’s yuan tumbled, sparking the biggest two-day selloff in Asian currencies since 1998 after the PBOC’s reference rate was cut to the weakest level since 2012.
“Their exposure to China provides additional headwinds for the Singapore banks,” David Lum, an analyst at Daiwa Securities in Singapore, said by phone. “Their base is still Singapore and Asean, which is also not doing well.”
The Straits Times Index has lost 9 percent this year, the worst-performing stock gauge in the developed world after Greece.
