Singapore's dollar, stocks slide on disappointing growth outlook

SINGAPORE's dollar and equities fell on Wednesday, after the country projected a slowdown in economic growth next year even as its inflation came below forecast, while investors awaited minutes of the U.S. Federal Reserve's last policy meeting.

The Singaporean dollar lost 0.4% after the city-state forecast growth would slow to between 0.5% and 2.5% in 2023 from about 3.5% this year.

"We think a 'two-sided economy' will become more stark in 2023. Some of the reopening sectors, like hospitality, aviation, F&B and construction, will expand at a healthy pace, even as manufacturing and external-oriented sectors contract," Maybank analysts wrote in a note.

Stocks were down 0.1%, after falling as much as 0.3% earlier, after data showed that Singapore's key consumer price gauge rose 5.1% in October, slightly less than forecast and below the previous month.

"Despite rising recessionary risk, we expect the MAS to tighten monetary policy again in April 2023, probably via another re-centering, to reduce intensifying core inflation pressures amid a tight labour market," the Maybank note added.

Singapore had tightened monetary policy last month for the fourth time this year to combat inflation, which is running near a 14-year peak.

Other regional currencies were mixed while the U.S. dollar steadied ahead of minutes of the Fed's recent policy meeting as investors looked for more clues on the bank's stance on future rates.

Philippines' peso and the South Korean won gained 0.2% and 0.3%, respectively, while Thailand's baht and India's rupee each eased 0.2%.

Stocks in Malaysia fell 0.1%, extending their decline for a third day as the wait for a new prime minister dragged on, after the leading two contenders failed to secure a majority and break a hung parliament. The ringgit added 0.1%.

Malaysia's king is due to pick a new prime minister and a special meeting of the country's Council of Rulers, which groups the heads of the country's nine royal houses, will be held on Thursday to discuss the formation of a new government.

Equities across the region firmed. Stocks in Manila rose over 1% to their highest level in two months. Thai and Indonesian stocks gained 0.5% each.

"Valuations in many areas are now cheap, sentiment towards Asian equities is already depressed, and any improvement in the macroeconomic backdrop could spark a sharp rally from current levels over the medium term," Schroders analysts said in a note.

HIGHLIGHTS

** Ayala Land Inc and SM Investment Corp are top index gainers in the Philippines

** Singapore's 10-year benchmark yield is up 0.4 basis points at 3.091%

** Top losers on the Singapore STI include Keppel DC REIT and Mapletree Logistics Trust - Reuters