STI reverses gain on trade concerns

Waning sentiment over a US-China trade resolution sent investors running for the hills in a broadly lower session in Asia.

This followed a Wall Street sell-off on Tuesday, triggered by key US officials being supportive of increasing levies on Chinese imports.

The mood on the day saw the Straits Times Index (STI) reverse Tuesday's 0.7 per cent gain to close at 3,283.84 yesterday, down 28.68 points or 0.9 per cent.

It has fallen by 108.45 points or 3.2 per cent this week.

"It had been a sea of red as markets in Asia digested the fact that Friday's tariff implementation from the US could become a reality and further hurt the precarious global growth situation," IG market strategist Pan Jingyi said.

Moreover, China's April trade figures - which were mixed - did little to improve market sentiment as Australia, China, Hong Kong, Japan, Malaysia and South Korea markets all ended lower.

Of the lot, the Nikkei 225 dropped 1.5 per cent to 21,602.59 - a five-week low.

A stronger yen, which tends to rally in times of risk-off sentiment, also weighed on the Japan market.

In Singapore, volumes were heavy, clocking in at 1.48 billion securities or 17 per cent over the average in the first three months of the year.

Meanwhile, total turnover came to $1.09 billion.

This was 6.4 per cent more than the January-to-March daily average.

Across the market, decliners outpaced advancers 258 to 155.

The STI had 23 of its 30 components ending in the red.

The banking trio pulled back from gains made on Tuesday.

DBS Group Holdings fell 19 cents or 0.7 per cent to $26.58. OCBC Bank slipped 13 cents or 1.1 per cent to $11.44 while United Overseas Bank dropped 27 cents or 1 per cent to end at $25.73.

Bucking the trend was Wilmar International, which closed at $3.59, advancing six cents or 1.7 per cent.

Not only did the counter open lower like the broader market, but its shares also traded ex-dividend.

"Wilmar continues to trade with strength, likely due to optimism on the future listing of its China unit in Shanghai, which analysts are expecting in the later part of 2019," UOB Kay Hian's vice-president of equities and financial products Brandon Leu said.

He added that investors are hoping the agri-business firm will reveal more details on the listing when it releases first quarter results on Friday.

Isetan Singapore was another gainer, closing two cents or 0.6 per cent up at $3.47.

It has added 12 per cent since announcing on Monday that the lease for its loss-making store in Westgate Mall will not be renewed.

With investors looking to developments from US-China trade talks that start tomorrow, a trader told The Business Times that investors are best placed to stay on the sidelines.

"Those who reduced positions in April and shortly after DBS released first-quarter results (on April 29) are likely to be happy with their decisions but they will still feel jittery," he added.

In a client note yesterday, Bank of Singapore's head of investment strategy Eli Lee said while it did not make sense for the private bank to participate in Monday's knee-jerk sell-off, "it is now prudent to pare back risk exposure given the less favourable backdrop at this point".

Global markets have rallied since the start of the year without a notable correction and that a deal between the US and China will be reached.

But SPI Asset Management managing partner Stephen Innes noted: "The unvarnished truth, however, suggests that this never-ending feud between the US and China is not about to leave the market landscape anytime soon."

For full listings of SGX prices, go to https://www2.sgx.com