Singapore shares fall 0.5% as investors stay on the sidelines

CAUTIOUS investors with an eye on the state of progress of US-China trade talks stayed on the sidelines, resulting in shares ending Monday on a losing streak.

The Straits Times Index (STI) opened slightly lower by 1.23 points, but slipped steadily over the session to close at 3,143.24, lower by 0.52 per cent or 16.44 points. Losers outnumbered gainers 230 to 135, or about two stocks down for every one up. It was a quiet start to the week, with only 744.74 million shares worth S$736.12 million changing hands.

"Markets tend to get themselves tied up in knots chasing headlines and by the week's end, one tends to find that playing the range or staying out altogether was probably the best strategy," said Jeffrey Halley, Asia-Pacific senior market analyst at Oanda.

On the trade front, China's Ministry of Commerce had said over the weekend that economic and trade teams from the US and China held "constructive" discussions in Washington late last week. They added that both Washington and Beijing have agreed to maintain contact.

But the Chinese delegation later cancelled a visit to US farms in Montana and its officials headed back to China earlier than planned, reviving worries over whether a trade deal could be reached anytime soon.

"Markets are walking a tightrope now, with the fundamental outlook continuing to deteriorate globally," said CMC Markets analyst Margaret Yang.

Financial stocks weighed on the local bourse, with heavyweight index constituents DBS Group and United Overseas Bank (UOB) leading the losses. DBS finished the day at S$24.91, down 0.95 per cent or S$0.24, while UOB fell 0.78 per cent or S$0.20 to close at S$25.56.

In Singapore, a defensive theme is likely to play out this week, added Ms Yang, with utilities, consumer staples and Reits outperforming cyclical industrials, banks and technologies.

Singtel was among the most active index stocks on Monday, with over nine million shares traded. It closed unchanged at S$3.17. Another telco, StarHub, closed at S$1.33, up 0.76 per cent or S$0.01 on a trade of close to 1.8 million shares.