Bulls And Bears

Asian markets up on China's easing of curbs

Beijing's move to relax foreign investment limits gives respite from trade war fears

Between trade wars, higher US dollar interest rates and a stronger greenback, the regional stock market environment remains challenging.

Stock markets in Asia advanced in thin trade yesterday, in tandem with a firmer Wall Street market on Thursday and some possible window dressing by funds ahead of their financial year's end.

The latter refers to portfolio rebalancing by fund managers buying well-performing stocks and selling those that have fared poorly, to make their portfolios look better in their annual reports.

China's move to ease foreign investment limits gave investors a temporary respite from trade war fears. It released a narrower list of sectors that foreign firms are restricted from investing in. The news, coupled with the European Union's agreement on migration, propelled Europe and US stock futures.

On the currency front, the US dollar continued to firm.

Tokyo ended 0.2 per cent higher, while Hong Kong's Hang Seng Index jumped over 1 per cent, and Shanghai rose more than 2 per cent.

In Singapore, the Straits Times Index failed to sustain intraday gains. It ended at 3,268.70, up 0.34 per cent, or 11.13 points, from Thursday's close. Year-to-date, the index has fallen some 4 per cent.

"Increased trade tensions... and elevated risk free rates continue to weigh on Asean equities," Morgan Stanley said in its latest Asia equity strategy report. "We feel most comfortable with our Singapore earnings outlook supported by high exposure to bank earnings (our key sector overweight), which should benefit from rising rates. We stick with our overweight rating while our new index target implies 8 per cent upside following the recent sell-off and reflects increased risk of global trade tensions," it added.

DBS experts were also cautious about selective purchases, noting there are no safe havens in this environment. But they still prefer China/Hong Kong and Singapore as their domestic policies are "flexible and remain growth driven. Long-term policies are in place to transform the economies to being services-oriented, and valuations in these markets have fallen to attractive levels".

Del Monte Pacific incurred a net loss of US$2.1 million (S$2.9 million), excluding one-off items of US$14.3 million, compared with US$17.2 million profit last year. This was due to lower export sales, reduced pineapple juice concentrate prices and strategic investments in trade spending and marketing. The stock fell 1.7 per cent to end at 17.7 cents.

A version of this article appeared in the print edition of The Straits Times on June 30, 2018, with the headline 'Asian markets up on China's easing of curbs'. Print Edition | Subscribe