Bulls And Bears

Asian markets rise on hopes of trade deal

But STI sees muted gains following GDP flash estimates that show 0.1% growth

Local investors were quick to make hay over the possibility that a trade deal might be nearing, as talks between China and the US appeared to advance over the weekend.

The United States called off a tariff hike planned for this week as China agreed to buy between US$40 billion (S$54.8 billion) and US$50 billion worth of US agricultural products.

Analysts see the development as more of a truce than a deal, because reaching a "phase two" agreement will involve tackling tougher issues.

Optimism in China, South Korea and New Zealand saw key indices add more than 1 per cent. Hong Kong's Hang Seng closed up 0.81 per cent, while Australian shares added 0.5 per cent.

The Straits Times Index (STI) saw more muted gains of 10.48 points, or 0.34 per cent, to 3,124.45.

This followed flash estimates for third-quarter gross domestic product (GDP) that showed growth of just 0.1 per cent year on year, unchanged from the previous quarter.

But GDP was up 0.6 per cent over the previous three months, so Singapore narrowly avoided a technical recession of two straight quarters of quarter-on-quarter decline.

The Monetary Authority of Singapore also eased monetary policy yesterday.

The STI's turnover was 1.12 billion shares worth $842.05 million. Losers edged out gainers 198 to 196.

Rex International was the most active, down 3.7 per cent to 7.9 cents with 42.8 million shares traded. Singapore eDevelopment was next, up 4.4 per cent to 4.7 cents on trade of 38.3 million.

Y Ventures saw unusually heavy trading, prompting a query from the Singapore Exchange. About 30 million shares changed hands as it retreated 18.8 per cent to 11.2 cents.

Synagie Corp fell 1.5 per cent to 13.6 cents. It said after last Friday's session that it will be the exclusive solutions enabler for Japanese multinational beauty company Kose's e-commerce efforts with Lazada.

Trade tensions may ease with the prospect of a deal, said Ms Esty Dwek, head of global market strategy for dynamic solutions at Natixis Investment Managers. But she does not expect a broad pact this year.

"Both sides remain far apart on many thornier issues and last week's agreement really only reinforced actions China has already been taking," she said, adding that China has had to buy more US pork due to the swine flu outbreak.

Markets should see ongoing support if the truce lasts until the end of next month and if the December tariff hike is also halted, she said.

A version of this article appeared in the print edition of The Straits Times on October 15, 2019, with the headline 'Asian markets rise on hopes of trade deal'. Print Edition | Subscribe