Singapore shares drop 0.4% on Tuesday amid cautious sentiment

SINGAPORE equities put in a mixed performance on Tuesday as investors continue to grapple with the ever-changing narrative of US-China trade talks.

That said, units in most real estate investment trusts (Reits) traded decidedly higher after US Federal Reserve chair Jerome Powell said the central bank is likely to hold interest rates in the coming months after three cuts this year. He added that the US job market and wage growth were also supporting inflation.

On Tuesday, the Straits Times Index (STI), weighed down by Singtel and some Jardine counters, recorded its second straight session of losses, finishing 12.78 points or 0.4 per cent lower at 3,207.85.

Elsewhere in the Asia-Pacific, markets were mixed. Australia, Japan and Taiwan closed with gains. China barely moved. Hong Kong, Malaysia and South Korea ended in the red.

At last count, Beijing's move over the weekend to consider raising penalties on intellectual property theft - one of the key issues obstructing a trade pact - gave market participants hope that a mini US-China trade deal could be signed sooner rather than later.

But markets appeared to struggle for direction on Tuesday, with observers noting a sense of caution remains as both sides have, yet again, failed to provide details of where talks were standing. Furthermore, any progress along trade between the two is always fragile.

"We are, of course, only one negative headline or tweet away from the sentiment turning on its tale, but for now, all is good with the world," Oanda Asia-Pacific senior market analyst Jeffrey Halley remarked.

Here, market participants were also lifted by sentiment that Singapore's manufacturing sector could be bottoming up after factory output unexpectedly grew 4 per cent year-on-year in October. This beat street expectations of a 1.4 per cent fall and outstripped September's revised figure of 0.7 per cent growth.

In Singapore, trading volume stood at 2.34 billion securities, double the daily average in the first 10 months of 2019. Meanwhile, total turnover clocked in at S$2.63 billion, 2.5 times the January-to-October daily average. The high numbers on Tuesday were attributed to the rebalancing of MSCI indices.

Across the market, decliners outpaced advancers 196 to 189. The blue-chip index had 18 of its 30 counters in the red.

Golden Agri-Resources was the STI's most active counter, closing one Singapore cent or 4.5 per cent lower at 21 cents with 852.4 million shares changing hands. Tuesday's total volume was 14 times the average over the 15 trading days leading up to Tuesday. 

The agribusiness faced a high volume of trading after being dropped from the MSCI Singapore Index on Tuesday. It was replaced by the STI's newest member, Mapletree Commercial Trust (MCT), which gained three Singapore cents or 1.3 per cent to S$2.43 with 202.4 million shares traded.

Much of the action in the Singapore market was on the Reit counters, which accounted for a third of the Singapore market's turnover. The asset class lost some shine in the mid-year after yields started to get compressed following strong interest after the Fed first lowered rates.

The iEdge S-REIT Index added 14.4 points or 1 per cent to 1,437.13, its best showing since Sept 4.

Meanwhile, Keppel Reit added three Singapore cents or 2.5 per cent to S$1.24, its best trading day since Dec 18, 2018.