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Singapore shares fall 0.3% as investors await trade deal details

WITH a "Phase One" deal between the US and China finally getting the green light, it could be argued that Asian equities had a rather tame start to the week after last Friday's agreement suggested trade relations appear to have turned the corner.

But the devil is in the details, something the recent announcements lack, with market watchers noting that more details will be needed before they act.

Singapore's Straits Times Index (STI) hovered around last week's closing for most of the session before a late dip to close Monday trading at 3,206.09, a decline of 7.96 points or 0.25 per cent.

Elsewhere in the Asia-Pacific, gains were seen on benchmarks in Australia, China, and Taiwan. Like the local market, Hong Kong, Japan, Malaysia and South Korea posted losses, which traders said was down to profit-taking after stocks rallied leading up to the announcement of the interim deal.

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While Vishnu Varathan, Mizuho Bank's head of economics and strategy for the Asia and Oceania treasury, acknowledged the "Phase One" deal as "a trade disaster averted", it was "nowhere in the vicinity of a global trade breakthrough".

He added: "Of course, the optimists will argue that the tariffs planned for mid-October and mid-December being avoided is a 'Big Deal'. And it is, given the propensity for global policy missteps." 

With that in mind, investors will be hoping for further details to emerge on top of Sunday's tariff suspension and rollback of prior tariffs together with China agreeing to purchase more US agricultural produce and assuring the protection of intellectual property.

It was a low-volume session in Singapore, where trading volume clocked in at 958.13 million securities, 80 per cent of the daily average in the first 11 months of 2019. Total turnover stood at S$827.87 million, 77 per cent of the January-to-November daily average.

Across the market, decliners outpaced advancers 192 to 174. Eighteen of the benchmark's 30 counters ended in the red.

With 27.9 million shares changing hands, Yangzijiang Shipbuilding was the STI's most active counter. It closed S$0.03 or 2.7 per cent lower at S$1.10.

The local banks were mixed. DBS Group Holdings fell S$0.12 or 0.5 per cent to S$25.70, OCBC Bank dipped S$0.06 or 0.6 per cent to S$10.91, but United Overseas Bank finished at S$26.42, up S$0.05 or 0.2 per cent.

With the US Federal Reserve putting a hold on interest rates, investors have been rotating out of real estate investment trusts (Reits), which for most of the year have outperformed the broader market.

KGI Securities head of Singapore research Joel Ng said Reits are unlikely to repeat 2019's performance next year, adding that it's best to be selective. The brokerage has recommended clients to pick up property trusts that benefit from secular trends, like e-commerce-focused EC World Reit (unchanged at S$0.76), and data centre owner Keppel DC Reit (up S$0.06 or 3.1 per cent to S$2.01).