BullsAndBears

Talk of Trump impeachment stirs markets

Questions raised over US political stability; Singapore bourse down for third straight day

Singapore shares slid for the third straight day yesterday, as the drama unfolding in Washington raised more questions about political stability in the United States.

Talk in the US capital that President Donald Trump may potentially face impeachment amid allegations of links with Russia stirred markets worldwide, with the Dow Jones Industrial Average dropping 1.78 per cent overnight.

Singapore's benchmark Straits Times Index (STI) took the cue and started slow, but found its footing to end with a more marginal 0.08 per cent drop to 3,221.66. About 1.11 billion shares worth $1.26 billion were traded across the whole market.

Tokyo pared the most among the main Asian markets, down 1.32 per cent, while Shanghai fell 0.46 per cent. Hong Kong eased 0.62 per cent and Sydney dropped 0.82 per cent.

Global stock markets have spent months speculating on what a Trump presidency will bring to the table, and so far there has been little to show in terms of the business and tax reforms that he promised.

These reforms now look more difficult amid the chaos, Bank of Singapore chief economist Richard Jerram said.

"A tail risk to consider is if Trump embarks on some foreign policy adventurism to try to distract attention from his domestic problems," he said. "This is an area where the President has a lot of freedom of action - either trade or military conflict - and either could concern markets."

There were 17 stocks on the STI that ended in the red yesterday. Yangzijiang Shipbuilding was the top loser, down 3.59 per cent, or 4.5 cents, to $1.21 on 20.5 million shares transacted. UOL Group closed down 12 cents, or 1.73 per cent, at $6.83.

Banks have been mixed in recent sessions after a strong run in the past two weeks. DBS Group Holdings shed 17 cents, or 0.82 per cent, yesterday to $20.63. OCBC Bank dropped four cents, or 0.38 per cent, to $10.38. However, United Overseas Bank added 20 cents, or 0.86 per cent, to $23.34.

Jardine Matheson Holdings led the nine STI gainers. It rose US$2.27, or 3.67 per cent, to US$64.17. Singtel was up only one cent, or 0.27 per cent, to $3.76 but saw 27.4 million shares traded. Rival StarHub closed down three cents, or 1.08 per cent, at $2.74, while M1 was down two cents, or 0.88 per cent, to $2.25.

M1 has a "buy" rating from DBS and a 12-month target price of $2.54 due to the recent talks around bid offers for the firm that may support the share prices in the near term.

"In the event of a block sale, such a move will also lead to a general offer for minority shareholders," said DBS in a note yesterday.

Noble Group was the top active, with 99.4 million shares traded. The commodity trader had a strong start on news that it is close to securing a new loan, but eventually dropped 1.5 cents, or 2.16 per cent, to 68 cents.

A version of this article appeared in the print edition of The Straits Times on May 19, 2017, with the headline 'Talk of Trump impeachment stirs markets'. Print Edition | Subscribe