Asia-Pacific markets end in sea of red

The impact of geopolitics on market performance is at times understated - but its effect was clearly felt yesterday.

The Singapore market returned from the four-day weekend to an environment blighted by fears of a long-drawn trade war between the US and China; protests in Hong Kong; and to a lesser extent, Argentines turning on their incumbent president in a primary vote.

Sentiment on local equities were also weighed down by Singapore's non-oil domestic exports tumbling 14.6 per cent year-on-year, and a cut to its gross domestic product forecast to between zero growth and one per cent for the full year.

With these factors in play, a knee-jerk sell-off ensued, with the Straits Times Index (STI) down by 1 per cent just after opening before ending at 3,146.73, down 22.21 points or 0.7 per cent yesterday.

Mr Jeffrey Halley, Oanda's Asia-Pacific senior market analyst, noted that with Singapore being a free market and a global bellwether economy, "its consistent run of poor data is cause for concern, both regionally and globally".

Elsewhere in the Asia-Pacific, shares in Australia, China, Hong Kong, Japan, Malaysia and South Korea were also in the red.

With protests in Hong Kong showing little sign of easing, the Hang Seng Index fell 2.1 per cent or 543.42 points to 25,281.30, a seven-month low.

With uncertainty reigning supreme and the flight to safety continuing to gather pace, bond, gold and yen bulls had their way.

The slump in Asian equities is suggestive that markets are bracing for more backlash from trade risks and risk re-pricing, said Mr Vishnu Varathan, Mizuho Bank's head of economics and strategy for the Asia & Oceania treasury.

In Singapore, trading volume clocked in at 1.37 billion securities, 14 per cent more than the daily average in the first seven months of 2019. Total turnover came to $1.52 billion, 43 per cent over the January-to-July daily average.

Across the broader market, decliners trumped advancers 299 to 156. The blue-chip index had 15 of the 29 counters in trading, ending lower. Yangzijiang Shipbuilding shares remain halted since last Thursday when reports emerged of Beijing's probe into an individual linked to the company.

Singtel, which fell eight cents or 2.5 per cent to $3.18, was the benchmark index's most traded stock with 37.5 million shares changing hands in the session after the telco recorded its first-quarter bottom line plunging 35 per cent on an India price war.

But Venture Corporation shares jumped 52 cents or 3.5 per cent higher to $15.28 after posting a 7.3 per cent fall in Q2 net profit to $90.8 million last Thursday.

Analysts are confident in its plans to tackle the semiconductor industry's near-term challenges and Venture's long-term strategy.

With protests in Hong Kong showing no sign of easing, most of the Hong Kong-based Jardine counters were among the main laggards on the benchmark index. Jardine Strategic Holdings closed 95 US cents (S$1.30) or 2.9 per cent lower at US$32; and Jardine Matheson Holdings ended down US$1.23 or 2.2 per cent at US$53.85. Hongkong Land finished five US cents or 0.9 per cent lower at US$5.40.

Financials were also lower. DBS Group Holdings closed 13 cents or 0.5 per cent lower at $24.81; OCBC Bank fell nine cents or 0.8 per cent lower at $11 while United Overseas Bank (UOB) finished at $25.75, down 30 cents or 1.15 per cent.

"DBS, OCBC and UOB posted record net profits, stable asset quality and strong capital for H1 2019; but further improvement in profitability will be difficult amid slowing global growth and the potential for an escalation of the US-China trade conflict," said Mr Simon Chen, a senior analyst at Moody's.

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