STI enters bear market territory as index slips below critical 2,800 point mark

This has not happened since 2012.

Singapore's Straits Times Index fell past the critical 2,800-point mark in morning trading today, marking the index's official entry into bear market territory.

The index was trading at 2,787 points as of 11:17 AM, down 21% from its peak of 3,539 points on April 15, Bloomberg data show.

Although definitions vary, a bear market is generally defined as a downturn of 20% or more in a span of at least two months.

Top active stocks included large caps like Singtel, OCBC, DBS and UOB.

Despite the downturn, some analysts believe that the market’s fundamentals remain sound, with low valuations failing to do justice to strong underlying growth prospects.

“We believe that stock valuations in Singapore, both on an absolute and relative basis compared to history, have undershot fundamentals. We see a relatively favorable investment outlook for Singapore, based on its attractive valuations combined with trough cyclical profitability, potentially reduced economic and currency volatility,” said Morgan Stanley in a recent report.

Others, however, fear that local equities may have greater room to fall.

“The four big sectors – offshore & marine, property, REITs and banks – are all under pressure and our test results suggest that their biggest challenges could still lie ahead as rising interest rates, falling oil prices and depreciating currencies collide with declining pricing power and sluggish demand,” said a report from Maybank Kim Eng.