Singapore stocks slump as Covid restrictions tighten, travel bubble with Hong Kong likely delayed

SINGAPORE — Singapore’s benchmark Straits Times Index closed 2.18% lower on Friday after the government announced further tightening in Covid-19 restrictions and the likelihood that the air travel bubble with Hong Kong may be delayed again.

Aviation-related stocks were hit hard. Singapore Airlines dived 5.66% while SATS, an aviation catering and airport ground handling firm, fell 3.91%.

The Singapore government said it’s “very likely” that the travel bubble with Hong Kong will not begin on May 26 as planned. It comes as the Southeast Asian country further tightened measures to curb rising local Covid cases, including stopping all dine-in services and capping public gatherings to two.

The Singapore-Hong Kong air travel bubble would have allowed travelers to skip quarantine. It has faced multiple delays from its initial launch date on November 2020 as Hong Kong reported resurgence in Covid-19 cases.

Both Singapore and Hong Kong are major Asian business hubs without domestic air travel markets. Their tourism and aviation industries, heavily reliant on international travel, have been badly hit by the pandemic.

Singapore’s Transport Minister Ong Ye Kung said Hong Kong is “a very safe region” now, with few new Covid cases detected daily. However, infections in Singapore have been climbing and the city-state likely won’t meet the threshold to start the travel bubble, he added.

Singapore and Hong Kong have previously agreed that the travel arrangement will be suspended if the number of unlinked local Covid cases in either cities exceed five on a seven-day moving average basis.

In a preliminary update on Friday, Singapore’s health ministry said it has confirmed 52 new cases of Covid-19. Among the cases, 24 are locally transmitted infections — four of which were not linked to previous cases.

The latest numbers take the Southeast Asian city-state’s cumulative confirmed infections to more than 61,500, according to health ministry data.

Meanwhile, Hong Kong on Friday identified one imported case, bringing its total of confirmed or probable infections to 11,819 since the outbreak, official data showed. The city has reported 210 deaths, according to the data.

Ong said he’s spoken with Edward Yau, Hong Kong’s secretary for commerce and economic development, about the Covid situation in Singapore. Both sides will make a decision early next week on whether to go ahead with the air travel bubble launch, said Ong.

The Singapore government also announced there will be more Covid-19 restrictions starting this weekend following a rise in local infections. The measures will take effect from this Sunday until June 13.

The new measures include:

• No dining-in at food and beverage establishments;
• Smaller social gatherings: A maximum of two people are allowed, from five previously;
• All workers who can work from home will have to do so.

The government will review the measures at the mid-way point — or around two weeks later — to see if there’s a need to adjust them, said Lawrence Wong, Singapore’s education minister and co-chair of the Covid taskforce.

Yu Liuqing, country analyst at consultancy The Economic Intelligence Unit, said in a note that the tightening “will effectively freeze the recovery of private consumption in the short term.”

But the Singapore economy overall will not contract unless another round of lockdown — domestically called a “circuit breaker” — is imposed for a prolonged period of time, he added.

Before Friday’s announcement, Singapore had already further tightened restrictions. Those measures started the previous weekend and included pre-event testing for large gatherings and the closure of some indoor gyms.