STI dips on rising trade friction

THE Straits Times Index (STI) ended in the red for the second straight day in the week, on the back of rising tensions between the US and China fuelling further animosity between the two and sending waves across key Asian markets.

Both Singapore and Indonesia tracked broader Asian shares lower on fears that cooling economic growth in China - amid its quarrels with the United States - had dampened investor sentiment.

The Hang Seng fell 0.9 per cent, while the FTSE Bursa Malaysia Kuala Lumpur Composite Index ended flat.

President Donald Trump accused China of undermining US efforts into pressuring North Korea to give up its nuclear weapons, indicating his trade war with Beijing is starting to exacerbate geopolitical tensions.

Mr Trump's remarks are reflecting concerns that the trade war will eventually morph into a protracted conflict with the world's second largest power, with suspicions rising in Beijing that Mr Trump's tariffs are part of a wider strategy to thwart China's rise as a global power, Bloomberg reported.

The above, DBS Group Research analyst Yeo Kee Yan said, could have prompted some profit taking given the market's bounce in recent sessions.

"Swings - be it up or down - can be sudden and wide on intra-day basis given the light trading activity. Our view is that the STI continues to be range bound from 3,200 to 3,350 in the weeks ahead," Mr Yeo noted.

In Singapore, a broad selloff in banks, offshore and marine, electronics and property sectors was probably a reflection of rising trade risk and EM capital outflow," said CMC Markets analyst Margaret Yang.

She warned the tumbling Argentine peso could trigger a renewed wave of emerging market currency rout similar to the Turkish lira recently.

In Singapore, the key STI shed 0.6 per cent, or 18.2 points to end at 3,225.72.

At the closing bell, decliners outnumbered advancers 229 to 156, seeing turnover of 2.24 billion shares worth S$1.09 billion in total.

Among the most actively traded counters by volume was Rex International with 106.4 million shares changing hands, flat at 7.1 Singapore cents.

Singtel was also among the most heavily traded counters with 37.42 million units changing hands, ending the day up 1.88 per cent, or six Singapore cents, to S$3.26.

The telco shrugged off news that Vodafone Hutchison Australia and TPG Telecom intend to merge into a A$15 billion (S$14.96 billion) telecommunications giant to take on key rivals Telstra and Optus, Singtel's Australian subsidiary.

It emerged that TPG Telecom must first obtain regulatory approval before splitting its Singapore mobile business from the rest of the company, the Info-communications Media Development Authority of Singapore announced.

Telco Starhub was up 2.47 per cent to S$1.66 after the news, while M1 fell 1.25 per cent to S$1.58.

CapitaLand gained 0.29 per cent to close at S$3.44 after it announced it had bought a 60,732-square metre prime residential site in Ho Chi Minh City, Vietnam, for 1.38 trillion Vietnamese dong (S$81.4 million) in cash, highlighting its overseas ambitions.

CapitaLand Mall Trust (CMT), meanwhile, shed 0.92 per cent to S$2.15, taking it flat in the year-to-date. Moody's Investors Service on Thursday changed the outlook on all CMT's ratings to "negative" from "stable" following CMT's announcement earlier this week that it will acquire the remaining 70 per cent stake in Infinity Mall Trust which holds Westgate mall in Jurong East.

For the full listing of SGX prices, go to btd.sg/BTmkts