Bulls And Bears

Early-session jump amid news on US tariffs

Some keep up surge to end the day higher, but rallies short-lived in other markets

Markets across the region enjoyed an early-session jump yesterday on news of a deadline extension to the United States tariffs but the momentum dropped off in some bourses.

Markets in China, Japan and Australia sustained the surge to end the day higher but rallies were short-lived in other markets, including South Korea and Singapore.

The Straits Times Index (STI) declined through the morning to 3,252.66 then recovered to 3,272.35, up 2.45 points or 0.07 per cent. Turnover was 1.61 billion securities worth $1.27 billion. Losers outnumbered gainers 233 to 173.

The STI's lacklustre effort could have been due to "a touch of scepticism over trade issues", said FXTM research analyst Lukman Otunuga.

Another reason is that a trade resolution might not have as large a benefit for regional markets as for China, said Mr Olivier d'Assier, head of applied research for Asia-Pacific at Axioma.

He said many investors had expected periphery countries in Asia to benefit somewhat if the trade war continues or worsens, as tech supply chains would reroute through them.

"If there is a trade resolution, then Chinese-made goods no longer need to transit via other regional countries to reach the US and avoid tariffs," said Mr d'Assier. "So perhaps the muted reaction in regional exchanges other than Shanghai, Shenzhen or Hong Kong is a reflection of this."

Venture Corp led advancers on the STI, adding 12.28 per cent to $18.10 on a volume of nearly six million shares. This was on the back of full-year results last week that were in line with street expectations.

"Record R&D expenses and inventory levels - possible leading indicators for the group - coupled with strong earnings outlook by key customers provide confidence in Venture's ability to at least sustain its robust growth momentum over the medium term," wrote DBS analyst Carmen Tay in a Monday report.

Shares of direct-selling firm Best World International dived as much as 25.8 per cent at one point as it resumed trading after a halt that lasted nearly five days last week. It ended down 18.45 per cent at $2.21, with 29.5 million shares traded.

It had halted trading after a media report raised questions about its lack of clarity on how its franchisees operate in China. It said it would order an independent review of its business and accounting practices.

Shares of electronics manufacturer Hi-P International rose 8.77 per cent to $1.24. Maybank Kim Eng analyst Lai Gene Lih upgraded the counter to "hold" from "sell" yesterday as he believes that the worst of its pricing pressure issues are over.

A version of this article appeared in the print edition of The Straits Times on February 26, 2019, with the headline 'Early-session jump amid news on US tariffs'. Print Edition | Subscribe