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Most Asian markets up on midterm results

This article is more than 12 months old

Other than China - due to trade war worries - regional markets ended in the green with STI rising 0.91 per cent

Asian markets rose broadly yesterday, as the US midterm elections panned out pretty much as analysts had expected - with the Democrats taking the House of Representatives while the Republicans retained control of the Senate.

DBS chief investment officer Hou Wey Fook said the results were overall positive for financial markets because the political gridlock caused by a split Congress will weigh on fiscal stimulus in the US, and in turn slow down the rise of the US dollar and rates.

"To push his economic agenda through, Trump will now need to seek compromises from both sides of the aisle - a tall order after running a polarising two-year presidency," said Mr Hou.

"We expect Trump's tax reform and other infrastructure programmes to face stiffer resistance."

Ms Silvia Dall'Angelo, senior economist at Hermes Investment Management, noted that trade tensions with China may escalate, saying: "A constrained President Trump might focus more forcefully on his trade agenda, an area where he enjoys wider freedom to implement policies without Congress approval."

China released trade data yesterday showing both imports and exports beat expectations last month, but analysts attributed the better performance to traders rushing shipments to the US ahead of higher tariffs and do not expect it to extend into a long-term trend.

As a result, the trade war's impact on the country's economy remains uncertain. Chinese markets closed lower, with the Shanghai Composite Index retreating 0.2 per cent to 2,635.63 points and the Shenzhen index falling 0.5 per cent to end at 1,333.98.

Otherwise, regional markets ended in the green, with Japan's Nikkei 225 jumping 1.8 per cent to 22,486.92, while the Kospi index in Seoul ended 0.67 per cent higher at 2,092.63.

Markets in Hong Kong, Australia and Malaysia all closed slightly higher.

In Singapore, the key Straits Times Index (STI) picked up 27.88 points, or 0.91 per cent, to end at 3,093.24.

Turnover on the bourse was 1.74 billion shares worth $1.17 billion. Gainers and losers were evenly matched, with 192 securities up and 202 down.

Shares of Yangzijiang Shipbuilding (Holdings) rose three cents, or 2.3 per cent, yesterday to end at $1.32. The shipbuilder on Wednesday reported a 10 per cent fall in Q3 net profit, although its revenue rose 23 per cent in the same period.

OCBC research analyst Low Pei Han upgraded Yangzijiang to "buy" from "hold" with a higher fair value estimate of $1.41, while CGS-CIMB's Lim Siew Khee maintained her "add" call on the stock with an increased target price of $1.37.

Ms Lim said Yangzijiang's reported profit formed about 85 per cent of the consensus forecast for FY2018, and the shipbuilder is on track for stable operational and financial performance for the year overall.

Genting Singapore was the most heavily traded counter, with 52.7 million shares changing hands as it lost 2.5 cents, or 2.7 per cent, to end at 89 cents before releasing its Q3 results after market close. It posted a net profit of $210.4 million, up 46 per cent from a year ago.

Among losers, Singtel fell six cents, or 1.9 per cent, to $3.08, after posting a 77 per cent decline in Q2 net profit yesterday.

DBS analyst Sachin Mittal said in a flash note that Singtel's earnings may have bottomed out in H1 2019. He noted nearly 60 per cent of the miss was due to weak contribution from Singapore, which DBS had expected to provide stable profit.

ComfortDelGro lost 16 cents, or 6.8 per cent, to close at $2.20.

Deutsche Bank Research on Wednesday downgraded the stock to a "sell", flagging the start of a potential price war in the ride-hailing space as Grab increases driver incentives ahead of competitor Go-Jek's entry into Singapore.

ComfortDelGro is due to announce its earnings for the latest quarter today.

For full listings of SGX prices, go to http://btd.sg/BTmkts