Amicable Trump-Xi meeting lifts market
The Straits Times Index starts Q3 with a bang, ending 50.65 points, or 1.5% higher at 3,372.26
The better-than-expected outcome to the G-20 meeting between US president Donald Trump and his China counterpart Xi Jinping cheered investors, giving equities a much needed lift from the doldrums of recent weeks.
"After spending the better part of two months in trade war purgatory and with G-20 done and dusted, risk markets have responded to Saturday's events in a reveller tone," Vanguard Markets managing partner Stephen Innes observed.
The bullish spirit of the day saw the Straits Times Index (STI) streak ahead to start the third quarter with a bang. It ended 50.65 points or 1.5 per cent higher at 3,372.26.
It was more of the same in the region, with Australia, China, Japan, Malaysia and South Korea all closing comfortably higher. Hong Kong remained closed for the observance of the Special Administrative Region Establishment Day.
Expectations of Saturday's meeting in Osaka was for a truce, with the restarting of stalled trade talks and the US agreeing not to proceed with fresh tariffs on US$300 (S$406) billion of Chinese goods.
As it turned out, investors got a bonus with news that Washington will allow US companies to resume business with Huawei Technologies. The move reverses the ban in May by the US Commerce Department and is seen as near-term positive.
That said, it doesn't hurt to view Saturday's outcomes with a pinch of salt.
While investors can take heart that a long drawn trade fallout has been avoided for now, Mr Raoul Leering, ING's head of international trade analysis, noted that "more is needed before we can change our expectations that another round of tariffs is coming".
In Singapore, trading volume clocked in at 1.09 billion securities, 91 per cent of the daily average in the first five months of 2019. Turnover stood at $1.19 billion, 14 per cent over the five-month average.
Across the market, advancers trumped decliners 295 to 129. Just two of the STI's 30 components finished in the red.
DBS Group Holdings jumped $0.64 or 2.5 per cent to $26.60, OCBC Bank was $0.19 or 1.7 per cent higher at $11.59 while United Overseas Bank finished at $26.61, up $0.48 or 1.8 per cent.
Last Friday, Singapore announced that it will issue up to five new digital banking licences and will begin taking applications in August.
Analysts were positive on what it would mean for the sector. DBS Equity Research analyst Lim Rui Wen noted that "greater competition will boost financial innovation and encourage a more vibrant banking industry, which is likely to benefit consumers".
UOB Kay Hian analyst Jonathan Koh noted that the local banks are equipped to "compete effectively against new entrants due to their comprehensive omni-channel approach".
With Huawei back in business with its US partners, unsurprisingly, the cyclically-sensitive manufacturing and semiconductor stocks outperformed the market.
Venture Corporation shares gained $0.71 or 4.4 per cent to $17, Hi-P International advanced $0.08 or 5.8 per cent to $1.47 and AEM Holdings finished $0.05 or 4.9 per cent up at $1.08.
Among pennies, Vibrant Group surged 2.8 cents or 20 per cent to 17.1 cents, on turnover of 47.2 million shares after completing the disposal of a 51 per cent stake in Sabana Investment Partners.
Vibrant intends to use proceeds from the divestment to undertake a partial redemption of $66 million worth of 7.5 per cent notes due in 2020.
An overwhelming amount of that volume was due to a married trade involving 45 million shares, or 6.7 per cent of all outstanding shares, in the mainboard-listed company at 27 cents each.
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