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Trade talk progress lifts Asian markets

This article is more than 12 months old

STI breaks six-day losing streak, rising 1.33%, with gainers outnumbering losers 239 to 143

Asian markets rode a wave of optimism to end higher yesterday, following several positive developments in US-China relations.

First, Canada granted bail to Huawei executive Meng Wanzhou, relieving worries her arrest would jeopardise the truce between the US and China reached at the G-20 summit earlier this month.

US President Donald Trump told Reuters he might intervene in the Huawei case if it would help achieve a trade pact with China, though US Trade Representative Robert Lighthizer has insisted the arrest is a criminal justice matter entirely separate from the tariff negotiations.

"Whatever's good for this country, I would do," Mr Trump said, adding that trade talks with Beijing are under way via telephone and more meetings between US and Chinese officials are likely to follow.

China then said it has agreed to cut tariffs on US-made cars from 40 per cent to 15 per cent, essentially removing the tariff hike it implemented in July at the start of the trade war. This will also put tariffs on US automobiles in line with auto imports from other countries.

"Though this will not close the trade gap between the two economies by a sizeable amount, this will be the first positive outcome from the 1st of December dinner meeting between President Xi and President Trump," ING economist Iris Pang wrote in a note.

Ms Pang added that "unless the US withdraws the Huawei case altogether, it is unlikely that either side will make big progress towards tariff reduction during this period".

Key indices in several markets notched one to 2 per cent gains on the positive news, with Tokyo's Nikkei 225 climbing 2.15 per cent to 21,602.75. South Korea and Australia both ended about 1.4 per cent higher, and Hong Kong's Hang Seng Index added 1.61 per cent to 26,186.71.

Gains were more muted in China, where the Shanghai Composite Index closed 0.31 per cent higher at 2,602.15 and the Shenzhen Composite Index edged up 0.16 per cent to 1,346.03.

The Singapore market took heart from the news of trade talk progress too - and rightly so, as private economists yesterday revised their forecasts for the country's 2019 gross domestic product (GDP) growth downward while warning that higher US-China trade tensions are a key risk for Singapore.

The Straits Times Index (STI) broke a six-day losing streak with gains of 1.33 per cent or 40.71 points to close at 3,099.99. It had closed 0.43 per cent lower on Tuesday at 3,059.28.

Turnover on the bourse was 1.1 billion shares worth $968.3 million, compared with 1.07 billion shares worth $939.6 billion the day before. Gainers outnumbered losers 239 to 143.

Most of the STI constituents ended in the black, with Golden Agri-Resources closing lower while Wilmar International ended flat.

Ezion Holdings continued to top the tables in terms of volume traded as 118.6 million of its shares changed hands. The offshore and oil-linked counter rose 6 per cent or 0.3 cent to $0.053, tracking a rise in oil prices on news of production cuts from the Opec+ coalition.

In a quarterly survey by the Monetary Authority of Singapore, economists estimated that Singapore's GDP growth will ease to 2.6 per cent next year, from 3.3 per cent in 2018. Previous projections put GDP growth at 3.2 per cent for this year and 2.7 per cent for 2019.

All of the survey's respondents cited trade protectionism as the top risk to the economy, compared with 89 per cent of them in September.

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