STI gains 0.8% in late surge
Market swings back from early losses after China statement on US tariffs, but sentiment may keep wavering as uncertainty rules
For simplicity's sake, it is best to divide yesterday's market performance into two parts, one before and the other after Beijing indicated that it does not intend to react hastily to the past weekend's tariff increase by Washington.
Investor sentiment, long dependent on news related to the US-China trade scuffle, saw a risk-friendly tilt after China's Ministry of Commerce spokesman Gao Feng's address to reporters in the Chinese capital.
Singapore's Straits Times Index (STI) traded as much as 15 points lower before a strong drive to close at 3,081.83, up 25.36 points or 0.8 per cent.
The surge in the later session put the blue chip index back in black for 2019.
With most closing before the latest trade development broke, other key markets in the Asia-Pacific were mainly lower.
China, Japan and South Korea were in the red. Australia and Malaysia had modest gains.
The local market ended higher but sentiment has been wavering daily and is likely to stay that way going forward, leaving many guessing whether to hit the buy or sell button.
"There is this constant threat of another mini-risk meltdown just waiting to happen on the next Trump tweet, but it's hard to ignore the dovish central bank messaging," VM Markets managing partner Stephen Innes told The Business Times.
"I suspect everyone including Singapore's and China's central banks will loosen policy to support the economy and buttress investor sentiment. I don't think investors really want to sell equities with central bank easing in the cards."
Meanwhile, a trader noted: "With uncertainty remaining, equities are currently not the flavour. Safe havens have become the bet of choice but that does not mean positions on equities will be closed."
In Singapore, trading volume was 1.18 billion securities, 98 per cent of the daily average in the first seven months of 2019. Total turnover came to $1.02 billion, just under the January-to- July daily average.
Across the market, advancers trumped decliners 234 to 172. The blue-chip index had two of 30 counters closing in the red.
Yangzijiang Shipbuilding, which gained 2.5 cents or 2.8 per cent to 91 cents, kept its place as the most active counter on the STI with 37.5 million shares changing hands.
The late turn towards pro-risk activity saw the local banks end higher. DBS Group Holdings climbed 22 cents or 0.9 per cent to $24.24; OCBC Bank gained six cents or 0.6 per cent to $10.57 and United Overseas Bank ended at $24.78, advancing 37 cents or 1.5 per cent.
Among real estate investment trusts (Reits), Mapletree Commercial Trust - the most likely pick for STI inclusion in September - continued to trade strongly. It added five cents or 2.3 per cent to finish at $2.24 yesterday to hit a 52-week high.
The Reit has gained 5.2 per cent this week.
Among the telcos, Singtel recovered from early losses to close unchanged at $3.15. StarHub closed one cent or 0.8 per cent down at $1.30.
Citi Research analyst Arthur Pineda said in a note dated Aug 27 that while yields appear attractive, StarHub's "defensiveness is in question as weak operating trends are likely to persist through the second half of 2019".
Yesterday's session may have offered reprieve, but in a way, markets are in unchartered territory.
In a note to clients, Bank of Singapore head of investment strategy Eli Lee wrote: "One issue, however, is that the economic impact of a modern trade war is not fully understood. As (Fed chairman Jerome) Powell said in his speech at Jackson Hole, there are no recent precedents to guide any policy response to the current situation."
This, Mr Lee said, is suggestive of the risk of missteps being "significant, and distribution of potential outcomes is biased toward the down side".
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