Asia equities get mixed start to the week

Investors took heart following a better-than-expected August reading for China's manufacturers. But worries over US President Donald Trump's latest threat meant it was a mixed start to the week for Asian equities.

Singapore's Straits Times Index (STI) dropped 0.3 per cent at opening, hovering in that region for most of the session before closing 5.64 points or 0.2 per cent lower at 3,119.99.

The blue-chip index managed to eke out a 0.4 per cent gain during a turbulent month.

Elsewhere in the Asia-Pacific, Hong Kong and South Korea notched up gains. But Australia, China and Japan posted losses. Malaysia closed flat.

With Mr Trump's latest threat in mind, perhaps unsurprisingly, the Shanghai Composite Index was the worst performer among the region's key benchmarks.

It ended yesterday at 2,905.19 shedding 26.98 points or 0.9 per cent.

Yesterday, China's official manufacturing purchasing managers' index beat expectations while its non-manufacturing equivalent continued on its expansionary path.

UOB economist Ho Woei Chen acknowledged that the data releases suggest that the Chinese economy is more resilient than expected.

But she added that "against the backdrop of US-China trade tensions and a global growth slowdown, we continue to see risks for China's economy tilted to the downside".

With high-level talks between the US and China expected to commence on Oct 10, reports that the US administration is aiming to limit capital inflows into China through delisting Chinese companies on US exchanges and limiting investment by US funds in China-based securities are likely to remain a concern.

CONFLICT SPILLOVER

While Washington has yet to confirm such plans, it is becoming clearer to observers that a conflict over trade issues has spilled over to technology and now investments.

"As a whole, the markets opened up much calmer than I imagined when I first read the Bloomberg article reporting that the US is weighing limits on US portfolio funds," remarked AxiTrader Asia-Pacific market strategist Stephen Innes.

"Somehow, I think it's way too early to put the enormity of this possible trade war escalation in the rear-view mirror."

In Singapore, trading volume came in at 934.64 million securities, 78 per cent of the daily average in the first eight months of 2019. Total turnover came to $818.34 million, 76 per cent of the January-to-August daily average.

Across the market, decliners beat advancers 239 to 160. The blue-chip index had 20 of its 30 counters in the red.

With 27.8 million shares changing hands, Singtel was the STI's most active counter. The telco's stock lost two cents or 0.6 per cent to $3.10.

The local banks were mixed. DBS Group Holdings added $0.10 or 0.4 per cent to $25.00, and OCBC Bank gained four cents or 0.4 per cent to $10.86, while United Overseas Bank finished at $25.66, down two cents or 0.1 per cent.

Yesterday, preliminary data from the Monetary Authority of Singapore showed that bank lending in Singapore was 0.6 per cent higher in August from a month earlier.

Continued contraction in consumer loans was offset by a rise in business loans.

Among real estate investment trusts (Reits), Mapletree Commercial Trust (MCT), which was added to the STI on Sept 23, fell five cents or 2.1 per cent to $2.29.

In its first week as a benchmark constituent, MCT was among the Singapore Exchange's top counters for institutional investor inflows.

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