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Singapore shares drop 0.7% on Monday after HK unrest, doubts over US-China trade deal

Local equities got the week off to a rough start after doubts emerged over US-China trade talks and tensions in Hong Kong seemed to hit fever pitch once again, with one person shot by police and another reportedly set alight by protestors.

The Straits Times Index (STI) could not shrug off those concerns despite better-than-expected earnings from DBS Group Holdings and ST Engineering. The benchmark ended at 3,240.65, skidding 23.65 points or 0.7 per cent.

Led by Hong Kong, other regional markets such as China, Japan, Malaysia, South Korea and Taiwan all posted sizeable losses. Bucking the trend was Australia.  One trader remarked: "When it came to influencing market sentiment on Monday, Wall Street's record closing last Friday did next to nothing in Asia."

In recent weeks, global equities rallied on expectations that a mini US-China trade deal will be signed this month, only gaining further credence after Beijing said last Thursday that Washington agreed to roll back some tariffs. But not for the first time, the US sent confusing signals following the announcement, which only rekindled fears that a deal could be out of reach.

"From our perspective, some rollback of tariffs would need to be delivered in order for China to sign up to any deal. Let's not forget that China also has needs and demands from this deal, it is not all about what the US wants. So if no rollback, it is hard to see even a phase one deal happening," said Robert Carnell, ING Asia-Pacific chief economist and head of research.

In Singapore, trading volume stood at 1.79 billion securities, 55 per cent over the daily average in the first ten months of 2019. Meanwhile, total turnover clocked in at S$1.29 billion, 23 per cent more than the January-to-October daily average.

Across the market, decliners trumped advancers 275 to 138. The blue-chip index's counters were a sea of red, with 25 of the blue-chip index's 30 counters closing in the red.

Among STI counters, Venture Corporation, which closed dropped S$0.97 or 5.8 per cent to close at S$15.63, faced a sell-off after analysts downgraded the electronics manufacturing services firm eventhough Q3 earnings released last Friday were an improvement from the previous year.

The local banks were mixed on the day. DBS shares managed to close S$0.03 or 0.1 per cent up to S$26.64 after posting a 15 per cent increase in Q3 net profit to S$1.63 billion, beating street expectations. Meanwhile, OCBC Bank edged down S$0.02 or 0.2 per cent down to S$11.11 while United Overseas Bank closed at S$26.86, falling S$0.09 or 0.3 per cent.

ST Engineering shares also lost S$0.12 or 2.9 per cent to S$4.00, after posting a 3.4 per cent rise in bottomline to S$139.1 million for the third quarter ended Sept 30. The improved performance comes on the back of higher revenue for all sectors, and rises in net profits for aerospace and others. 

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