Singapore shares add 0.4% on sustained Brexit, trade deal hopes

TAKING cues from Monday's record close on Wall Street, Asian markets were mostly higher on Tuesday, with investors growing increasingly optimistic over concrete progress on the US-China trade front as well as diminishing fears of a no-deal Brexit.

Returning from the long weekend, Singapore's Straits Times Index (STI) opened 1 per cent higher but investors took to booking profits after last week's strong performance, with the benchmark ending at 3,197.04, an 11.51-point or 0.4 per cent gain.

"US-China trade conflict remains a critical near-term narrative for the equity market and with Washington and Beijing coalescing around Phase one of the trade deal, the market has started pricing in bullish expectations around Phase two which is thought to include a complete withdrawal of the proposed December US tariffs," AxiTrader Asia-Pacific market strategist Stephen Innes said.

Traders were also encouraged by US corporate earnings which remain supportive of a risk-on environment as well as optimism that an October rate cut by the US Federal Reserve is a certainty.

In Singapore, trading volume stood at 1.09 billion securities, 91 per cent of the daily average in the first nine months of 2019. Meanwhile, total turnover clocked in at S$1.46 billion, 35 per cent over the January-to-September daily average.

Across the market, decliners trumped advancers 235 to 178. Seventeen of the blue-chip index's 30 counters ended in the red.

Yangzijiang Shipbuilding saw active trading and closed higher on Tuesday. It rose 0.5 Singapore cent or 0.5 per cent to 95.5 cents with 40.8 million shares changing hands, the most on the STI.

Local tech stocks were mostly higher. They were led by AEM Holdings, which added one Singapore cent or 0.7 per cent to S$1.49. It is currently up 84 per cent on the year. SGX market strategist Geoff Howie said the tech solutions provider "has been the strongest performer among Singapore's 50 most traded stocks both in the month of October, and the 2019 year to date".

AEM Holdings is expected to report third-quarter earnings on Friday.

Stapled securities of Eagle Hospitality Trust (EHT) staged a comeback, gaining as much as 9 per cent on Tuesday after saying all expenses for the repair work of the Queen Mary will not be borne by the trust, but instead by the sponsor, Urban Commons. EHT units eventually closed two US cents or 3.7 per cent higher 56.5 US cents on 29.3 million traded after traders, who were looking to make a quick flip from last week's plunge, cashed out.

The local banks all ended higher. DBS Group Holdings closed up S$0.19 or 0.8 per cent at S$25.37, OCBC Bank added three Singapore cents or 0.3 per cent to S$10.79 while United Overseas Bank fared the best of the trio, closing at S$26.40, advancing S$0.31 or 1.2 per cent.

Elsewhere in the Asia-Pacific, Australia, Japan and Malaysia registered gains. South Korea was mixed while China and Hong Kong closed lower.

In particular, the Shanghai Composite Index fared the worst, dropping 25.87 points or 0.9 per cent to 2,954.18. The index was weighed down by tech suppliers to Huawei after news that the US Federal Communications Commission plans to vote to designate Huawei and ZTE as national security risks.