Sell-offs continue amid risk-off stance, Latest Business News - The New Paper

Sell-offs continue amid risk-off stance

This article is more than 12 months old

Asian markets influenced by Monday's heavy declines on Wall Street as China increased tariff rate on US goods

Risk-off stance remains prevalent, as sell-offs continued yesterday in local and regional bourses, although there was a paring of early losses as the session went on.

Singapore's Straits Times Index (STI) opened 1 per cent lower but clawed back to finish at 3,223.71, down 10.57 points or 0.3 per cent.

The benchmark index has fallen by 168.58 points or 5 per cent since May 3, the session before US President Donald Trump's tweet about raising tariffs.

In Asia, Australia, China, Hong Kong, Japan and Malaysia ended lower.

The Hang Seng, which returned to trading after Monday's break, fared worst, closing 1.5 per cent down at 28,122.02.

South Korea's Kospi managed to gain 0.2 per cent.

Asian markets took their cues from Monday's heavy declines on Wall Street as China ramped up tariffs on US goods in a tit-for-tat move.

Market watchers considered Beijing's announcement of an increase in the tariff rate to 25 per cent for US$60 billion (S$82 billion) of US goods a gentle response to Friday's tariff hike by the US.

Following Beijing's move, fears were stoked as the US trade office said it was looking to apply tariffs on a further US$300 billion worth of Chinese exports to the US.

But tensions eased in the afternoon, thanks to Mr Trump expressing optimism that trade issues can be resolved and Chinese State Councillor Wang Yi saying that both countries have the "ability and wisdom" to reach a trade deal.

In Singapore, trading volume clocked in at 1.35 billion securities or 7 per cent over the daily average in the first four months of this year.

Meanwhile, total turnover came to $1.2 billion, 17 per cent more than the January-to-April daily average.

Across the market, decliners outpaced advancers 232 to 172.

The benchmark index recorded broad-based losses, with 19 of the STI's 30 components ending in the red.

The local banks were mixed.

DBS Group Holdings added $0.10 or 0.4 per cent to end at $26.10.

OCBC Bank dipped $0.01 or 0.1 per cent to $11.19 while United Overseas Bank closed $0.05 or 0.2 per cent lower to end at $25.13.

Defensive sectors like telcos, utilities, healthcare and consumer staples outperformed the broader market.

Singtel closed one cent or 0.3 per cent higher at $3.15 while transport operator ComfortDelGro ended five cents or 2 per cent higher at $2.57.

As a whole, the market was broadly sold down, which CMC Markets' Margaret Yang said "suggests investors are deeply concerned about the uncertainties surrounding the US-China trade relationship".

Interestingly, some tech-related counters registered gains.

Traders attributed such interest to bargain hunters buying up counters that are now trading at attractive valuations after multiple days of sell-offs.

AEM Holdings shares added 3.5 cents or 3.8 per cent to close at 96.5 cents; Hi-P International gained $0.05 or 4.1 per cent up at $1.27; and Venture Corp $0.12 or 0.8 per cent up at $15.78.

UMS Holdings jumped three cents or 4.9 per cent to close at 64.5 cents.

This was after the precision engineering firm increased its stake in catalist-listed JEP Holdings by 10.9 per cent.

The purchase - through a married deal - triggers a mandatory conditional cash offer at 15 cents per share.

On the other hand, JEP shares tumbled to close one tick above UMS's offer price at 15.1 cents, down 2.1 cents or 12.2 per cent.

In the near term, IG market strategist Pan Jingyi expects risk-off sentiment to be maintained.

This is given the low expectations that neither the US nor China would concede to each other's demands.

"The market is largely feeling its way around in the dark at this point given the mixed messages coming through."

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