Trade worries drag STI down 0.6%

Sentiments hurt by Wall Street's fall on concerns that US may seek fresh tariffs on imports from China

Another day, another soft lead from Wall Street overnight.

That and a quiet data day saw share prices in the Singapore bourse trading listlessly, with the barometer closing lower alongside regional peers as worries escalate over trade tensions.

The Straits Times (STI) Index fell 21.7 points or 0.6 per cent to finish at 3,517.73 yesterday. Key indices in Japan, Hong Kong and South Korea closed higher while China, Taiwan, Australia and Malaysia noted declines.

US stocks fell overnight on Wednesday led by poor retail numbers in US and extended concerns that US President Donald Trump would seek fresh tariffs on imports from China.

Traders are also likely to continue to maintain a cautious stance ahead of next week's Federal Open Market Committee meeting helmed by new Fed chair Jerome Powell.

With wages and inflation still subdued, Maybank FX Research does not expect the Fed to depart from scheduled rate hikes.

For the local bourse, there are silver linings. In a recent strategy report, DBS Research revised upwards its year-end target for STI to 3,715, following stronger than expected results that led to earnings upgrades for 2018.

The house noted that MSCI Singapore saw the strongest earnings growth revision among Asian countries after MSCI Hong Kong, which it attributed mainly to a more optimistic outlook on the global recovery that was driving Singapore's economic prospects.

"Singapore market valuations' discount to the region is at or near an all-time low, which is unjustified in our view.


"Riding on the cyclical recovery tailwinds, its earnings growth is one of the highest in the region as the recovery broadens out to the services sector and is thus seen to be more sustainable," DBS Research said. It is maintaining its positive stance on Singapore with a neutral rating.

While Singapore is vulnerable to rising US protectionist trade policies, its exports are well diversified. With that, DBS Research said it was more important to watch for Singapore's sensitivity to a downturn in the oil and gas and electronics sectors given its high exposure to these sectors.

Yesterday, nearly two billion shares worth $1.3 billion were done versus the previous day's 1.9 billion shares worth $1.2 billion. Losers outnumbered gainers with 220 counters down and 184 counters up.

Three banking heavyweights OCBC Bank, United Overseas Bank and DBS Bank fell between 0.7 per cent and 1.8 per cent.

Singtel, the preferred pick among analysts, gained some ground, advancing two cents or 0.6 per cent to $3.42.

RHB Research said that Singtel's 7 per cent to 14 per cent stock underperformance over the past six to 12 months following a sell-down offers a good opportunity to accumulate.

NutryFarm International jumped eight cents or nearly 35 per cent to 31 cents andprompted a query from the Singapore Exchange (SGX).

The Hong Kong-based company on SGX's watch list called for a trading halt at 12.56pm pending an announcement.

Spackman Entertainment Group was the day's 10th most active with 27 million shares worth $2.5 million traded. The counter rose 0.2 cent or 2.2 per cent to 9.2 cents.

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