STI dives on US-China trade impasse

With the US and China deadlocked in trade deal negotiations, the Singapore market started the week in negative territory, with investors more concerned over renewed tensions between the two sides.

Investors in Asia were also keeping a look-out for the countermeasures China would impose on the US following last Friday's tariff hike on US$200 billion (S$273 billion) worth of Chinese goods, IG market strategist Pan Jingyi said.

The market had a modest rebound on Friday on hopes that trade talks in Washington could bear some fruit, but the resulting impasse saw the Straits Times Index (STI) finish at 3,234.28, down 39.22 points or 1.2 per cent yesterday.

It was a sea of red for other markets in Asia too, with Australia, China, Japan, Malaysia and South Korea all ending lower.

Hong Kong, closed for a holiday, will resume trading today.

In Singapore, trading volume clocked in at 760.37 million securities or 60 per cent of the daily average in the first four months of 2019.

Meanwhile, total turnover came to $1 billion.

This is just under the January-to-April daily average.

In the broader market, decliners outpaced advancers 279 to 118.

Compared with the broader market, the benchmark index had 22 of the STI's 30 components trading in the red.

The index was weighed down by the local banks, which make up 40 per cent of the total weighting of the STI.

DBS Group Holdings ended $0.55 or 2.1 per cent lower at $26.00.

Its shares declined following a Citi Investment Research downgrade of the bank to "neutral" due to the lender's exposure to China amid uncertainties over a US-China trade deal.

OCBC Bank was not spared either, closing $0.19 or 1.7 per cent lower at $11.20, as Phillip Capital downgraded the lender to "accumulate" due to an increase in OCBC's credit cost forecast.

That said, UOB Kay Hian remains overweight on the Singapore banking sector with "buy" calls on DBS and OCBC with a target price of $30.50 and $14.62, respectively.

United Overseas Bank dropped $0.43 or 1.7 per cent to end at $25.18.

ThaiBev was sold off after it posted a 12 per cent dip in net profit for Q2, despite its results being in line with street expectations and most research houses maintained their calls on the food and beverage player.

ThaiBev was the most traded counter with 71.6 million exchanging hands, closing six cents or 7.3 per cent lower at 76.5 cents.

"It was likely a combination of a price correction after the counter's surge this year and being sold down following its results," a remisier said.

Bucking the trend was ST Engineering.

The firm, which will release first-quarter results for the period ended March 31 on May 16, advanced two cents or 0.5 per cent to $4.04.

"It looks like the market is anticipating a good set of results from ST Engineering and investors may also view the company as a defensive stock to hold amid the trade talk's negative development," UOB Kay Hian's vice-president of equities and financial products, Mr Brandon Leu, said.

Market watchers also noted that investors are shifting to other defensive listings like real estate investment trusts and business trusts on recent uncertainties surrounding trade.

Despite recent developments, there are still opportunities in the market but investors should tread cautiously.

A trader told The Business Times: "The recent market dip presents opportunities to purchase stocks in companies with good cash reserves but do not make huge purchases, just nibble as there is still a lack of clarity on how much further the market may drop."

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