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Singapore shares tumble amid Asian rout after Trump threatens China tariff hikes; STI down 3.4% at reopen
SINGAPORE stocks extended their slide as trading resumed after the mid-day break on Monday following US President Donald Trump's threat to ratchet up tariffs on Chinese imports.
The Straits Times Index (STI) plunged 3.41 per cent or 115.52 points to 3,276.77 by 1.01 pm, after the benchmark index opened trading down 1.9 per cent, or 62.97 points at 3,329.32.
Singapore Exchange market strategist Geoff Howie noted that Monday’s opening represents the third weakest STI opening over the past five years - just behind a 2 per cent slip last February, and a 2.4 per cent tumble in February 2016.
In New York, US stock index futures dived on Sunday after Mr Trump said he would raise tariffs on US$200 billion worth of Chinese goods to 25 per cent from 10 per cent by this Friday, and would soon target hundreds of billions more.
"For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods," Mr Trump tweeted on Sunday night. "The 10% will go up to 25% on Friday."
DBS analysts wrote in a research note on Monday morning that Mr Trump's tariff threat will likely create a "knee-jerk impact" on financial markets, and that the latest move could be his negotiation strategy to put pressure on China to agree to a deal very soon.
Regarding the impact on the Singapore market, the researchers noted that the risk-off effect should send cyclicals lower, with stocks likely to be down over the next 1.5 days, before attention turns to China’s next move, as Chinese Vice-Premier Liu He is scheduled to return to the US for trade talks on Wednesday. The analysts added that a pullback of the STI to 3,300 is on the cards.
On the Singapore bourse, losers beat gainers 346 to 76 by the afternoon trade, after about 1.02 billion shares worth S$831.46 million changed hands.
Among the most heavily traded by volume, Genting Singapore lost 1.6 per cent, or 1.5 Singapore cents to S$0.955, with 26 million shares traded; and YZJ Shipbuilding shed 1.9 per cent, or three Singapore cents to S$1.53, with 23.2 million shares traded.
Financials also took a beating after trading resumed in the afternoon - UOB led the fall with a 6.8 per cent drop to S$25.88, OCBC lost 4.7 per cent to S$11.40, and DBS slipped 4.3 per cent to S$26.54.
These also come as shares of the three local banks have gone ex-dividend (ex-div). The ex-div date for UOB was May 6 for 70 Singapore cents, while the ex-div date for OCBC was May 3 for 23 Singapore cents. DBS has two ex-div dates this month, one on May 2 for 60 Singapore cents, and another on May 17 for 30 Singapore cents.
Other active stocks included Wilmar International, which fell 5.2 per cent, or 19 Singapore cents to S$3.45.
Amongst a sea of red, the only counter that seemed to buck the trend was 800 Super, which gained 9.9 per cent, or eight Singapore cents to S$0.89.
This comes on the back of news that the Lee family which controls 800 Super Holdings has made a voluntary conditional offer for the Catalist-listed rubbish collection firm in a bid to delist it, calling on financing from private equity firm KKR. The Lees are offering S$0.90 in cash for each 800 Super share, in a deal that values the company at S$161 million.
Elsewhere in Asia, equities tumbled and the safe-haven yen strengthened.
The benchmark Shanghai Composite Index sank 5.58 per cent by the close, its steepest single-day drop since February 2016. The Shenzhen Composite Index, which tracks stocks on China’s second exchange, plummeted 7.38 per cent. In Hong Kong, the Hang Seng Index fell 3.03 per cent.
Taipei shed 1.8 per cent, while Sydney and Wellington were each one per cent down. Meanwhile, financial markets in Japan will remain closed until Tuesday for a national holiday, though the Nikkei 225 futures lost 1.8 per cent to 22,085.
The yuan also took a beating, sliding over 1.3 per cent at one point to around 6.80 against the US dollar, its biggest fall in more than three years.
The flight to safety saw the US dollar surge against higher-yielding, higher-risk units, with South Africa’s rand off one per cent, the Mexican peso 0.9 per cent lower, and the Australian dollar 0.6 per cent lower, AFP reported.
European shares fell sharply when trading opened on Monday. Germany’s DAX and France’s CAC indices led declines, down 1.7 per cent and 1.8 per cent respectively. Italy and Spain also fell more than 1 per cent while markets in Britain remained shut for a bank holiday.
On oil markets, both the US West Texas Intermediate and Brent crude were hammered more than two per cent by worries that a trade war between the world's top two economies could hit demand for the commodity.