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China data woes end STI upward streak

This article is more than 12 months old

Worse-than-expected figures indicate further weakness in world's second-largest economy, signs of global slowdown

Asian markets declined broadly yesterday, following news of worse-than-expected Chinese data indicating further weakness in the world's second-largest economy and signs of a global slowdown.

For the month of December, China's exports shrank 4.4 per cent from a year earlier, the largest drop in two years. Its imports fell 7.6 per cent, the most since July 2016. Analysts had forecast exports and imports to grow by 3 per cent and 5 per cent, respectively.

The unexpected contraction overshadowed the markets' optimism from last week's trade talks between Washington and Beijing.

Stock markets in South-east Asia were particularly hard hit by the news, as China is the region's largest trading partner.

In Singapore, the Straits Times Index (STI) started the day strongly with a momentary spike above 3,200 at market open.

However, it reversed course shortly after and spent the rest of the day trending downwards to close at 3,173.46, down 25.19 points or 0.79 per cent.

The decline ended a six-day winning streak that saw the STI climb nearly 140 points from a low of 3012.88, but analysts have predicted upside ahead.

DBS strategists said yesterday that they expect the STI to recover to 3,500,on the assumptions that US-China trade frictions ease, the US Federal Reserve hikes interest rates just once or not at all this year, and Asian currencies see their lows against the US dollar.

"Near term, we continue to adopt a more guarded stance as more companies could sound the caution bell at the upcoming results season and the earnings recession trend may extend for at least two more quarters," they added.

Some 1.28 billion securities worth $727.42 million changed hands, which worked out to an average unit price of $0.57 per security. Losers beat gainers 242 to 142.

All but seven STI constituents ended the day in the red, with financials and industrials the biggest drags on the index.

OCBC Bank gave up 15 cents or 1.29 per cent to end at $11.50, while DBS Bank lost 21 cents or 0.85 per cent to close at $24.57.

Industrials mostly ended lower as well, except for ST Engineering which managed a 0.28 per cent gain, or one cent, to close at $3.58.

The only other STI counter to end in the black was ThaiBev. The spirits-maker rose two cents to $0.70 on volume of 60.1 million shares.

A Bloomberg report yesterday noted that the counter was likely to move on news that its rival Anheuser-Busch InBev is considering an initial public offering of its Asian operations. Exotix Capital analyst Nirgunan Tiruchelvam told Bloomberg that the rumoured IPO would show ThaiBev and its subsidiary Sabeco to be " undervalued".

Four of the five STI counters that stayed unchanged were under trading halts related to a $11 billion deal between CapitaLand and Ascendas-Singbridge to create Asia's largest diversified real estate group. They were Ascendas Real Estate Investment Trust, CapitaLand Commercial Trust, CapitaLand and CapitaLand Mall Trust.

Among actively traded stocks, Best World International gained 12 cents or 4.5 per cent on volume of 3.7 million to close at $2.76, following news that it is investing in A*Star spin-off Celligenics through a share subscription agreement.

It plans to invest around $5.63 million for a 12.5 per cent stake in the biomedical start-up and will have the right to later subscribe for new shares to increase its stake to 15 per cent.

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