Business

Wall Street gains offer reprieve in Asia

But disappointing China data erodes early advances as investors remain concerned over recent political and economic issues

A week and a half has passed since US President Donald Trump caught many off-guard by declaring tariffs on the rest of China's imports to the United States.

But Mr Trump appears to have blinked first as Washington delayed tariffs on some of those imports to December.

The concession made for a strong Tuesday session on Wall Street, which carried over to Asia yesterday with the Straits Times Index opening 0.8 per cent higher. But it lost steam to end the day almost flat at 3,147.60, up just 0.87 point from Tuesday.

Disappointing China economic data was cited as one reason for the relief rebound easing off as investors remain concerned over recent political and economic issues.

Elsewhere in the Asia-Pacific, shares in Australia, China, Hong Kong, Japan, Malaysia and South Korea all ended higher but, like the local market, pulled back from early gains.

In a note to clients, Bank of Singapore head of investment strategy Eli Lee wrote that Washington's latest move "signals US concerns over this round of tariffs' impact on the US consumer and economy".

"By pushing some tariffs to Dec 15, beyond the key Christmas buying season, the US is looking to alleviate some of these economic headwinds, at least over the near term," he added.

US and Chinese officials have also agreed to hold trade talks over the phone in a fortnight's time, which gave observers hope that some semblance of progress may emerge on trade issues.

In Singapore, trading volume clocked in at 1.04 billion securities, 87 per cent of the daily average in the first seven months of 2019. Total turnover came to $1.28 billion, 21 per cent over the January-to-July daily average.

Advancers outpaced decliners 219 to 195.

The blue-chip index had 15 of its 30 component counters closing in the red.

Trading in Yangzijiang Shipbuilding remains suspended. The company said after the market closing that its executive chairman is assisting Chinese officials in a probe.

Singtel, which dipped two cents or 0.6 per cent to finish at $3.16, was the benchmark index's most traded stock with 15.3 million shares changing hands. The telco's shares have fallen 4 per cent since posting a 35 per cent drop in net profit for Q1 last Thursday.

Wilmar International shed 19 cents or 4.7 per cent to end at $3.86. The agribusiness company reported on Tuesday that Q2 net profit halved, missing street estimates, as the African swine fever in China affected demand for soya bean meal, in turn hurting crush margins.

The agribusiness company was one of the STI's main gainers in July as institutional investors snapped up its shares on the back of the potential listing of its Chinese unit in Shenzhen.

Going forward, interest in the counter is likely to be dictated by the listing bid.

Citi Research's Patrick Yau noted: "Wilmar's stock price trend has moved away from tracking palm oil prices since early 2019 as the planned initial public offering of its Chinese unit progresses further. Despite this set of soft results, this event remains a catalyst."

Among the cyclically-sensitive semiconductor counters, AEM Holdings added two cents or 1.8 per cent to $1.11 with 11.2 million shares traded. Analysts from Maybank Kim Eng and CGS-CIMB have noted that AEM's earnings for the first half surpassed expectations.

That said, CGS-CIMB analyst William Tng pointed out in an Aug 9 report that given "AEM's business remains very much order-driven, some caution may be warranted on FY2020 earnings expectations as its major customer may have front-loaded some of its requirements into FY2019".

The local banks reversed Tuesday's losses. DBS Group Holdings advanced 18 cents or 0.7 per cent to $24.99, OCBC Bank finished 10 cents or 0.9 per cent higher at $11.10 while United Overseas Bank added 15 cents or 0.6 per cent to $25.90.

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