Singapore shares slump 1.2% as US-China trade tensions mount

WITH the US and China deadlocked in trade deal negotiations, the Singapore market - like its regional peers - started the week in negative territory as investors grow more concerned over renewed tensions between the two sides.

Investors are keeping a look-out for what kind of countermeasures China would impose on the US following last Friday's tariff hike on US$200 billion worth of Chinese goods, with fears that the back-and-forth would dent global growth.

The market had a modest rebound on Friday on hopes that trade talks in Washington could bear some fruit, but the resulting impasse saw the Straits Times Index (STI) finishing at 3,234.28, down 39.22 points or 1.2 per cent on Monday. The benchmark index has fallen by 158.01 points or 4.7 per cent since last Friday, the session before US President Donald Trump's tweet about raising tariffs.

Trading volume clocked in at 760.37 million securities or 60 per cent of the daily average in the first four months of 2019. Meanwhile, total turnover came to S$1 billion, 98 per cent of the January-to-April daily average.

Across the market, decliners outpaced advancers 279 to 118. Compared to the broader market, the benchmark index had 22 of the STI's 30 components trading in the red.

The index was weighed down by the local banks, which make up 40 per cent of the total weighting of the STI.

DBS Group Holdings ended S$0.55 or 2.1 per cent lower at S$26.00. Its shares declined on Monday following a Citi Investment Research downgrade of the bank to "neutral" with a lower target price of S$27.00 due to the lender's exposure to China amid uncertainties over a US-China trade deal.

Meanwhile, OCBC Bank closed S$0.19 or 1.7 per cent lower at S$11.20 while United Overseas Bank dropped S$0.43 or 1.7 per cent to end at S$25.18.

In a Monday report, UOB Kay Hian remains overweight on the Singapore banking sector with "buy" calls on DBS and OCBC with a target price of S$30.50 and S$14.62 respectively.

Citi expects Singapore banks' shares to be "range-bound" for as long as US-China trade uncertainties persist, given how sensitive their earnings are to market sentiment and Greater China exposure.

ThaiBev was the most traded counter, with 71.6 million shares changing hands. The food and beverage player closed down six Singapore cents or 7.3 per cent at 76.5 cents after posting a 12 per cent dip in its bottom line for the second quarter. The results were in line with street expectations.

Bucking the trend was ST Engineering. The firm, which will release first-quarter results for the period ended March 31 on May 16, advanced two Singapore cents or 0.5 per cent to S$4.04.

KTMG, formerly known as Lereno Bio-Chem, resumed trading on the Catalist board at 2pm, closing flat at 40 Singapore cents.