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Singapore shares add 0.6% on Monday after China rate cut

A REVERSE repo rate cut by The People's Bank of China (PBOC) was unexpected, but it boosted market sentiment and raised hopes of further stimulus measures by Beijing, making for a noticeably risk-on session which saw most Asian benchmarks close higher.

Here, the Straits Times Index (STI) opened lower but reversed those losses before the midday break, en route to a 19.80-point or 0.6 per cent gain to close Monday at 3,258.66.

Elsewhere in the Asia-Pacific, China, Hong Kong, Japan, Malaysia and Taiwan all posted gains. Bucking the regional trend was Australia, which closed lower while South Korea barely moved.

After losing 5 per cent last week on Hong Kong protests turning more violent, the Hang Seng Index managed to turn in a positive performance. It ended 354.43 points or 1.4 per cent higher at 26,681.09. AxiTrader chief Asia market strategist Stephen Innes said: "Even the Hong Kong markets ended the day in positive territory, as of now geopolitical risks remain of little concern for markets as trade talk euphoria masks all other logical matters."

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Over the weekend, Beijing and Washington said recent trade talks were "constructive". This followed White House economic adviser Larry Kudlow's comment last Friday that a deal was coming down to "short strokes".

"But suffice to say, these talks have been far from 'conclusive' given the contentious nature of the sticking points, lowering the chances of either side conceding quickly," noted Vishnu Varathan, Mizuho Bank's head of economics and strategy for the Asia & Oceania treasury. That said, markets do not appear to be cautious, with Mr Innes observing they "appear to be baking in a swift and meaningful Phase One (trade) agreement".

Observers here do not need to look far to see the effect the year-long trade squabble has had. Singapore's non-oil domestic exports (NODX) posted an eighth straight month of declines, missing street forecasts. UOB economists expect "NODX to contract 8.5 per cent in 2019 while Singapore's trade outlook remains hinged on the US-China trade developments".

In Singapore, trading volume stood at 1.60 billion securities, 39 per cent over the daily average in the first 10 months of 2019. Meanwhile, total turnover clocked in at S$1.09 billion, just over the January-to-October daily average. Across the market, advancers trumped decliners 244 to 163. The blue-chip index had four of the 30 counters closing in the red.

With 94.8 million shares changing hands, Yangzijiang Shipbuilding was by far and away the STI's most active counter on Monday. The counter streaked ahead, closing at S$1.08, jumping S$0.08 or 8 per cent. The shipbuilder saw renewed interest from the market after chief executive Ren Letian said his father, executive chairman Ren Yuanlin, who has been on leave for over three months to assist in a confidential probe in Beijing, is "safe and healthy" and expected to return "before too long".

Along with the Hang Seng Index's recovery, the Jardines, which have considerable exposure to Hong Kong, ended higher. Among them, Jardine Matheson Holdings added US$0.28 or 0.5 per cent to US$57.20, Jardine Strategic Holdings gained US$0.86 or 2.7 per cent to US$32.55 while Hongkong Land was up US$0.10 or 1.9 per cent at US$5.49.

The local banks were mixed on the day. DBS Group Holdings edged down S$0.02 or 0.1 per cent to S$26.60. Meanwhile, OCBC Bank added S$0.04 or 0.4 per cent to S$11.19 while United Overseas Bank closed at S$26.93, advancing S$0.19 or 0.7 per cent.