Bulls And Bears

Geopolitical and trade worries drag STI down

Week-on-week, index loses 0.5% - its second consecutive weekly decline since February

A whole bunch of factors - but chiefly geopolitical tension following the scrapping of the US-North Korea summit - hurt risk appetite in the Singapore bourse and drove the key Straits Times Index to finish the week on a limp note.

The benchmark fell 15.69 points or 0.44 per cent to close at 3,513.23 yesterday; week-on-week, the index lost 16 points or 0.5 per cent, logging its second consecutive weekly decline since the slide in global markets in February.

Turnover came in at 1.5 billion shares worth $1.03 billion versus Thursday's 1.5 billion shares worth $1.2 billion with 159 counters up and 219 down.

It didn't help that on the Wall Street, the Dow and S&P 500 indexes closed moderately in the red at Thursday's session. Other key Asian bourses put up a mixed showing with key indexes in China, Hong Kong, Australia and South Korea seeing red while Malaysia, Japan and Taiwan posted gains.

Worries over protectionism and a trade war reared its head once again after President Donald Trump raised the spectre of high US tariffs on imported cars. The "Trump threat" persisted elsewhere with markets rattled after he unilaterally called off the summit with North Korean leader Kim Jong Un. "The market is waking up to the fact that the historic summit between the US and North Korea will not play out like a Hollywood blockbuster but a long Korean drama series," said Bank of Singapore's head of investment strategy Eli Lee.

He added that both sides may simply need more time to prepare and find a middle ground in their demands."The ball is now in President Trump's court. Given his desire for eventual talks, the market correction may have been premature, in our view. We advise clients not to overreact, but stay engaged and nimble in the market," he added.

In the Singapore market, these fears overshadowed encouraging domestic macro data released yesterday, showing robust factory output in April beating street estimates and the service sector seeing business receipts click higher by 8.5 per cent in the first quarter from a year ago.

Losses were led by dips in the Jardine stocks as well as all three banking stalwarts with DBS Group Holdings, UOB and OCBC falling between 0.03 per cent and 0.5 per cent.

The day's big hitters included Top Glove and Creative Technology which jumped nearly 8 per cent to $3.50 and 3.4 per cent to $6.01 respectively.

A version of this article appeared in the print edition of The Straits Times on May 26, 2018, with the headline 'Geopolitical and trade worries drag STI down'. Print Edition | Subscribe