Asia markets retreat, led by China losses

MARKETS across Asia ended markedly lower on Monday, as the US dollar gained on strong economic data and Chinese markets plunged despite central bank efforts to shore up an economy dragged down by the ongoing trade war.

In a sign of growing concern over US-China relations, foreign investors dumped 9.7 billion yuan (S$2 billion) of A shares in the Chinese markets' first session after a week-long break.

The massive sell-off came even as the People's Bank of China (PBoC) announced over the weekend that it would cut its reserve requirement ratio for selected lenders for the fourth time this year, freeing up about 1.2 trillion yuan (S$241.2 billion) in liquidity.

The Shanghai Composite Index lost 3.7 per cent, its biggest loss since June, while Hong Kong's Hang Seng closed 1.4 per cent lower. South Korea's Kospi index lost 0.6 per cent, and Australia's ASX 200 slid 1.4 per cent to end near a four-month low.

In Singapore, the key Straits Times Index closed at 3,181.45 - below its support level of 3,200, having lost 28.34 points or 0.88 per cent in the session. The index had ended at 3,209.79 on Friday.

About 1.8 billion shares worth S$1.08 billion changed hands, compared with 1.5 billion shares worth S$936.2 million on Friday. Losers outnumbered gainers 292 to 103.

Among heavily traded stocks, Chip Eng Seng lost 9.5 Singapore cents or 10 per cent to end at S$0.85 after 197.6 million shares were traded.

The construction and property firm announced on Friday night that seven of its shareholders had entered into an agreement to sell about 186.1 million shares, amounting to 29.73 per cent of its total issued shares, to Celine Tang, managing director of property developer SingHaiyi Group.

Chip Eng Seng said the agreement was expected to be completed on or before Tuesday.

Singtel said on Monday morning that it has signed a memorandum of understanding with its subsidiary Optus and its regional associates to grow the gaming and e-sports ecosystem in South-east Asia, Australia and India. The group plans to cooperate in scaling up e-sports, content creation and distribution, as well as collaborate with the broader gaming ecosystem.

Singtel shares closed down one Singapore cent or 0.3 per cent to S$3.20 following the announcement.

The US dollar rose against the Singapore dollar to S$1.385 per US dollar as at 6.30pm on Monday, after a bond selloff on Friday sent yields soaring to 3.23 per cent and the non-farm payrolls report revealed that US unemployment had fallen to a 50-year low of 3.7 per cent in September.

Hussein Sayed, chief market strategist at FXTM, said: "Overall, the report suggests that the labour market continues to tighten, and the Federal Reserve needs to continue raising rates to manage the booming economy."

The Monetary Authority of Singapore (MAS) will release its October monetary policy statement on Friday, with most analysts expecting it to tighten policy via a slope increase.

DBS rates strategist Eugene Leow and FX strategist Philip Wee noted that while the MAS is concerned about global risks to the world economy, the concerns are not enough to hold back policy normalisation.

"As witnessed in the past six months, Singapore's fundamentals have been sufficient to keep the SGD nominal effective exchange rate firm even while the SGD depreciates against the strong USD," they wrote in a Monday morning report.

"Looking ahead, we continue to see the value of the US dollar rising above S$1.40 later this year."

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READ MORE: Foreign investors dump China stocks