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Singapore shares drop 0.2% on Friday, unchanged on the week

AHEAD of G-20 summit talks between the US and China, the local market traded within range in what was the last session of the first half of 2019.

Singapore's Straits Times Index (STI) closed at 3,321.61, down 6.99 points or 0.2 per cent on Friday. On the week, the benchmark index barely moved from last Friday's close of 3,321.40.

Across the Asia-Pacific, Australia, China, Hong Kong, Japan and South Korea were lower. Malaysia was flat.

The Saturday meeting in Osaka is the key focus for investors this weekend. Even though recent news reports suggest that Washington and Beijing have worked out a temporary truce, most markets were cautious with investors also booking profits ahead of the meeting. Afterall, there is no certain outcome, especially when it concerns US President Donald Trump.

Bank of Singapore head of investment strategy Eli Lee said in a note that "the odds of having a detailed formal trade agreement seem low, and we expect that the developments at the G-20 will not provide full clarity on whether President Trump is finished with tariff escalation or whether both sides will eventually reach a trade agreement".

Unlike the sell-off in May, when Mr Trump turned up his offensive on China over trade issues, the blue-chip index managed to gain 6.5 per cent in June. Over the first six months of 2019, it is up 8.2 per cent. 

Markets have had much to contend with in the first half of the year - a global economic slowdown, the US-China trade war and the sharp tilt towards accommodative central bank policy. Markets have also been volatile, thanks to uncertainties over trade issues.

In Singapore, trading volume on Friday clocked in at 1.09 billion securities, 9 per cent above the daily average in the first five months of 2019. Total turnover came to S$1.44 billion, 38 per cent over the January-to-May daily average.

Across the market, decliners pipped advancers 185 to 161. The benchmark index had 18 of the STI's 30 components in the red.

Financials, among the big gainers in June, had a mixed day at the office. DBS Group Holdings added S$0.13 or 0.5 per cent to S$25.96, United Overseas Bank was unchanged at S$26.13 while OCBC Bank finished at S$11.40, S$0.02 or 0.2 per cent lower.

After May's sell-off, shares in the local banking trio hit attractive valuations in June, driving interest among investors.

Koufu Group saw its shares add S$0.015 or 2.2 per cent to S$0.69 after DBS Equity Research upgraded its recommendation of the company to "buy". DBS also raised its target price on the food court and coffeeshop operator to S$0.85. DBS analysts expect Koufu to post higher earnings growth, driven by the turnaround of its foodcourt and kiosk businesses.

Among pennies, Tee International shares continued to track upward. On Friday, they went up a tick or 1.2 per cent to S$0.087.

KGI Securities head of research Joel Ng noted that as at end-February, the company had an order book of S$425 million and expects to complete the sale of a 28 per cent stake in Tee Land no later than July 15. Proceeds from the sale of the stake would allow Tee International to strengthen its balance sheet to take on more mechanical and electrical projects, he said.