Business

All eyes on Xi's views on trade spat today

Top three banks lead gains as Straits Times Index mirrors key regional indices

Share prices in the Singapore bourse shrugged off last Friday's steep losses in Wall Street with the key Straits Times Index (STI) advancing 7.5 points or 0.2 per cent to finish at 3,449.96 yesterday.

The gains in the local bourse unfolded alongside across-the-board rises in other key regional indices including those of China, Japan, Hong Kong, Australia and Malaysia.

Last Friday's over 2 per cent drop in the three key US stock indices - one of the biggest single-day losses this year - was led by concerns over the US-China tug-of-trade-war and misses in March payrolls data out of the US.

The noise over the trade war is expected to continue with any escalation in the tension between the world's two largest economies bound to dent risk sentiments and heighten volatility in global equities.

Traders will watch closely if the US is adamant about imposing tariffs on an additional US$100 billion in Chinese imports, and how China will retaliate.

"With (China) President Xi Jinping due to speak (this morning) at the Boao forum, the attention will be on the Chinese leader for his views towards the latest trade skirmish," said IG Markets' Jingyi Pan.

"Even if he should remain championing free trade as his rhetoric had been in the recent Davos forum, investors are bracing for a retaliation towards the latest US$100 billion tariff directive in the early part of the week that could keep markets on edge."

Even so, Citi Research said that on the back of the synchronised growth in the global economy and tax cuts in the US, it expects an 8 per cent rise in global equities by year end.

Hence, the recent pull-back may be an opportunity for investors to judiciously buy on dips.

The major risk to its current view that what could trigger the transition to a bear market is a cyclical slowdown in growth (a risk that it believes markets could be underestimating), a policy breakdown in the US - which is anything but far-fetched - or a sharp turnaround in the US dollar.

Phillip Capital in its monthly review said that while the general risk-off sentiment has dragged the STI into a prolonged correction that began in January, the long-term uptrend remained intact.

Even with the severe correction of some 7.5 per cent off the 3,611 high in February, the STI managed to keep the structure of the uptrend in place as it continued to form a series of higher highs and higher lows.

More importantly, it added to the 3,354 to 3,340 support area that is needed to hold for the uptrend to regain strength.

Yesterday's turnover in the Singapore Exchange (SGX) came in at 1.95 billion shares worth $1.2 billion versus last Friday's 2.2 billion shares worth $1.4 billion. Gainers trounced losers with 249 counters up and 165 counters down.

Gains were led by Singapore's three banking juggernauts with DBS Bank closing higher by 0.5 per cent to $27.80, United Overseas Bank up 1 per cent to $27.65 and OCBC Bank advancing 0.3 per cent to $12.80.

KrisEnergy jumped 0.9 cent or nearly 10 per cent to 10.2 cents, and was the day's third most active with some 64 million shares worth $6.5 million done.

Yesterday, Keppel Corp - which is a controlling shareholder of KrisEnergy - said that it has inked a cooperation agreement with the company to be appointed preferred contractor.

Kingboard Copper Foil Holdings surged seven cents or over 18 per cent to 45 cents with 41 million shares worth $18 million exchanging hands.

The sharp swing prompted an unusual trading activity query from SGX.

For full listings of SGX prices, go to http://btd.sg/BTmkts