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Trade issues still hogging spotlight

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STI mostly hovers around Monday's close before ending up slightly at 3,090

Trade issues will continue to remain the central topic dictating market sentiment. But yesterday, a lack of developments on the trade front as well as US markets being shut on Monday made for a thinly traded and fairweathered session here.

The Straits Times Index (STI) mostly hovered around Monday's close before settling at 3,090.63, up 7.67 points or 0.25 per cent.

Elsewhere in the Asia-Pacific, the region's key markets were mixed. China joined Singapore in the black. On the other hand, Australia, Hong Kong, Malaysia and South Korea were in the red. Japan was flat.

"The uncertainty about the US-China trade continues to rule the markets, setting the month of September off with a risk-aversion," ING Asia economist Prakash Sakpal noted.

The cautious atmosphere did not come as a surprise. After all, China said on Monday it lodged a complaint with the World Trade Organisation against the US over import duties, adding that Washington's latest tariffs breached the consensus the two had reached during the G-20 summit in Osaka in June.

Beijing and Washington are also finding it tough to see eye-to-eye on an elementary undertaking like agreeing to a schedule for face-to-face talks.

"If they're struggling to decide simple itinerary, expectations for anything tangible to arise from the trade talks are looking incredibly dim at this point. The negative tariff overhang is ineliminable, which continues to leave investors balancing equity market risk on a very slippery slope," AxiTrader's APAC market strategist Stephen Innes said.

In Singapore, trading volume clocked 1.02 billion securities, 85 per cent of the daily average in the first seven months of 2019. Total turnover came to$647.63 million, just 60 per cent of the January-to-July daily average.

According to Bloomberg data, yesterday's turnover is the lowest for a full session since April 22.

Across the market, decliners outpaced advancers 192 to 169. The blue-chip index had five of the 30 counters in the loss column.

IG market strategist Pan Jingyi acknowledged that sector performance yesterday was a mixed bag and the defensive utilities sector fared better than the rest.

"The sense of caution can be seen seeping in into the afternoon, with the STI paring some gains ahead of the US opening, expecting a softer return for Wall Street following the labour day hiatus," she observed.

Yangzijiang Shipbuilding, unchanged at 90.5 cents, remained the most active counter on the STI with 25.7 million shares changing hands.

The local banks were mixed. DBS Group Holdings was unmoved at $24.35.

OCBC Bank gained two cents or 0.2 per cent to $10.65 and United Overseas Bank ended at $24.93, dipping seven cents or 0.3 per cent.

Sembcorp Marine (Sembmarine) continued its advance, closing two cents or 1.7 per cent up at $1.18, after the offshore and marine firm said it won contracts worth $400 million on Monday.

Sembmarine's parent, Sembcorp Industries, also got a lift, gaining six cents or 2.9 per cent to $2.10.

The latest contracts bring the value of deals won in FY2019 to $575 million, exceeding CGS-CIMB's full year expectation of $500 million.

CGS-CIMB analyst Lim Siew Khee is of the view that Sembmarine's "20 per cent plunge over the past 3 months has priced in the losses it guided for FY2019".

Among second-line stocks, CSE Global added 1.5 cents or 3.4 per cent up at 45.5 cents after acquiring industrial power systems manufacturer Volta for US$25.1 million.

The acquisition did not come as a surprise to CGS-CIMB analyst Cezzane See, given that CSE "is continuously looking out for value accretive and strategic buys to grow".

The deal is positive as it expands CSE's depth in the onshore oil and gas market, and deal valuations were fair, she wrote.

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