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Singapore shares drop 0.3% after HK bill draws ire of Beijing

CONCERNS that a prospective trade deal between the US and China is teetering towards a setback bared teeth on Wednesday, via the US Senate passing the Hong Kong bill.

Needless to say, Capitol Hill has drawn the ire of Beijing, triggering a sea of red that swept across equity markets in Asia.

On the surface, Singapore's Straits Times Index (STI) appeared to weather the latest trade development better than most of its peers, falling 9.09 points or 0.3 per cent to close at 3,229.78. Elsewhere in the Asia-Pacific, markets in Australia, China, Hong Kong, Japan, Malaysia, South Korea and Taiwan all posted losses.

US President Donald Trump can resort to using his presidential veto but it is unlikely to change the outcome as it passed both Congress and the Senate with an overwhelming majority.

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This puts the self-styled dealmaker, already facing an impeachment probe, in a difficult position as he aims to make sealing a trade deal with China a reality.

"Considering that the US and China are struggling even to agree to 'phase one', which had been deemed more digestible, hopes for a swift conclusion to the trade conflict have clearly been misplaced," FXTM market analyst Han Tan said.
 
AxiTrader chief Asia market strategist Stephen Innes felt that with the bill's introduction, "future US-China trade discussions, if they continue at all, could be fraught with peril, so it makes sense for investors to at least buy some risk off insurance through convexity or even hedge into gold".

There were other factors investors had to grapple with on Wednesday, though not all were negative on sentiment. Of note was China's central bank moving to lower both one- and five-year loan prime rates following cuts to two interbank rates in the weeks prior. 

The decisions were widely expected given China continues to combat increasing growth headwinds.

In Singapore, trading volume stood at 1.20 billion securities while total turnover clocked in at S$1.10 billion. Both of these values were 4 per cent over their respective daily averages in the first 10 months of 2019.

Across the market, decliners trumped advancers 262 to 145. The blue-chip index had 19 of its 30 counters in the red.

Investors paid increased attention to Singtel, which added eight Singapore cents or 2.5 per cent to S$3.27. The 42.3 million shares traded on Wednesday is 78 per cent more than the counter's average of the past 15 trading days.

With no headlines in the local market concerning the telco, price actions were instead influenced by its Indian associate Bharti Airtel. Bharti's stock surged after Indian telcos indicated plans to raise phone rates. Bharti plans to do so from December.

Given the city-state's largest telco has an 8.2 per cent weightage on the STI, traders acknowledged that the benchmark's performance was pulled up by the Bharti news.

Like the broader market, the local lenders were mixed. DBS Group Holdings fell S$0.26 or 1 per cent to close at S$26.18 and United Overseas Bank lost S$0.28 or 1.1 per cent to S$26.39. Meanwhile, OCBC Bank was unchanged at S$11.12.

With oil prices mirroring the likelihood of a mini trade deal between the US and China, investors quickly jettisoned their holdings in the local market's upstream oil and gas players. Rex International dived 1.8 Singapore cents or 9.4 per cent to 17.4 cents while GSS Energy shed 0.6 Singapore cent or 6.4 per cent to 8.8 cents.