Singapore shares could rebound, underpinned by signs the economy is on track for a recovery, analysts said. The blue chip Straits Timex Index closed at 2,647.91 on Friday, down 33.12 points or 1.24 percent from the week before.
Analysts said the latest data showing that the decline in exports eased further in August showed Singapore's trade-reliant economy was stabilising after technically emerging from a recession in the second quarter.
"Going forward, we continue to expect trade to show a lesser pace of decline on the back of base effects and stabilisation in the external conditions," Morgan Stanley Research said in a note. CIMB-GK economist Song Seng Wun said Singapore's improving exports will have a positive effect for the third quarter gross domestic product.
"With the fear factor diminishing, Asian exporters are starting to benefit from global inventory restocking, and a positive impact on manufacturing production and export in the coming months," Song added. Although gross domestic product is still projected to contract by 4-6 percent this year, analysts said the worst is over and the economy has started to grow again after falling into a recession in the third quarter of last year.