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Rekindled US-China tensions hit markets

This article is more than 12 months old

Key Asian indices continue to trend downwards, with Hang Seng bearing the brunt; STI slides 40.4 points to end at 3,115.52

Asian markets were dealt another blow yesterday as optimism from the US-China trade truce was all but extinguished with the arrest of Huawei Technologies' chief financial officer in Canada over potential violations of US sanctions on Iran.

CMC Markets' Margaret Yang told BT: "Asian markets were badly punched by fears of re-escalated US-China trade spat following the arresting of Huawei's CFO.

"Market sentiment turned sour on potential retaliation measures by China as this incident severely undermined their trade relationship and put the trade truce under threat."

Needless to say, the arrest provoked outrage from Beijing and might complicate the already testy trade relationship between the two biggest economies just as they were showing signs of improving.

This weighed heavily on key Asian indices, which continued to trend downwards with the Nikkei, Hang Seng, Shanghai Composite Index, ASX 200, Kospi and Kuala Lumpur Composite ending lower on the day.

Of the lot, Hong Kong stocks again bore the brunt of the dipping sentiment, with the benchmark index falling by as much as 3 per cent before closing 663.30 points or 2.5 per cent lower at 26,156.38.

In particular, tech stocks - especially those of Huawei's suppliers - were badly hit. But, this is mostly concentrated in the Chinese mainland, Hong Kong and US markets, where the majority of Huawei's suppliers are listed, said Ms Yang.

Tokyo shares were also weighed down by a weaker US dollar against the yen.

In Singapore, the Straits Times Index (STI) closed 40.4 points or 1.3 per cent lower at 3,115.52. Of the 30 STI constituents, all but eight counters ended the day in the red.

Turnover on the bourse stood at roughly 1.28 billion shares worth $860 million, which worked out to an average unit price of $0.67 per share. Decliners greatly outnumbered advancers 245 to 151.

Liftboat-focused Ezion Holdings was the most actively traded stock, sliding $0.005 to $0.056 with 78.4 million shares changing hands.

Genting Singapore was the most active index stock.

It closed $0.01 or 1 per cent lower at $1 with a turnover of 27.6 million shares.

Banking stalwart UOB was the index's biggest loser in percentage terms, dropping $0.72 or 2.8 per cent to close at $25.02.

The STI's biggest loser in dollar terms - Jardine Matheson Holdings - ended US$1.56 or 2.3 per cent down at US$65.34.

Hongkong Land Holdings was the STI's biggest gainer, adding US$0.04 or 0.6 per cent to end at US$6.54.

Among other financials, DBS closed $0.51 or 2.1 per cent lower at $24.14 and OCBC dropped $0.18 or 1.6 per cent to close at S$11.31.

While most counters on the index ended lower, shares in property player CapitaLand were among the bright spots, closing $0.03 or 0.9 per cent up at $3.23.

CapitaLand real estate investment trusts also fared better. Units in CapitaLand Mall Trust closed $0.01 or 0.4 per cent up at $2.26 and units in CapitaLand Commercial Trust added S$0.01 or 0.6 per cent to close at $1.78.

On key events in the coming days, Ms Yang said: "Markets are also likely to stay cautious ahead of next Tuesday's House of Commons Brexit vote to decide UK's future after leaving the European Union.

"Political and trade uncertainties are likely to suppress risk appetite for the next couple of days."

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

BUSINESS & FINANCE