Bulls and bears

Investors relieved as US-Iran tensions ease

STI rises on better sentiment, including over news of US-China trade deal

Chinese investors use computer terminals as they monitor stock prices at a brokerage house in Beijing on Jan 10, 2020.
Chinese investors use computer terminals as they monitor stock prices at a brokerage house in Beijing on Jan 10, 2020.PHOTO: AP

The American airstrike last week that killed an Iranian general made tensions between Teheran and Washington the focal point of market chatter this week, but that had toned down by the time markets closed yesterday.

Asian equities were mostly up after both sides appeared to have settled the score, although not before Iran hit two US bases in return.

The improved mood allowed the Straits Times Index (STI) to make steady gains to finish at 3,255.95, up 8.47 points or 0.3 per cent.

Yesterday's better performance helped it gain 17.13 points or 0.5 per cent for the week.

Elsewhere, Australia, Hong Kong, Japan, South Korea and Taiwan closed higher but China and Malaysia bucked the trend. The Shanghai Composite Index posted a slight loss but still recorded six straight weeks of gains.

Soon after Teheran's response on Wednesday, investors ran for safe-haven assets but rotated out just as fast when Iran said it was not looking for further escalation.

"It was a temporary blip in an otherwise positive environment for equities since the (China-US) trade deal was confirmed," a broker said.

Chinese officials also confirmed the mini trade deal will be signed on Jan 15 in Washington, leaving Asia's markets in a relatively happy place.

CMC Markets analyst Margaret Yang said: "This helped to clear the last hurdle... following a de-escalation in US-Iran tensions. The question is how much more upside is (left), given that December's rally has more or less priced this in."

Trading volume in Singapore clocked in at 1.57 billion shares worth $1.20 billion, with gainers outstripping losers 226 to 193.

Singtel, which fell 1.2 per cent to $3.32, was the STI's most active with 25.5 million shares traded.

Investors sold the stock after the telco's associate Bharti Airtel revealed plans to raise up to US$3 billion (S$4 billion) to pay fines to India's regulators. Citi Research believes the exercise will not affect Singtel's cash flows.

Singapore Airlines (SIA) edged up 0.2 per cent to $8.95.

Daiwa Capital on Thursday said the carrier's low valuations are attractive. The brokerage, has a "buy" call with a price target of $10.18.

UOB Kay Hian analyst K Ajith expects SIA to report a strong third quarter on good passenger numbers but is cautious about the fourth quarter due to the bush fires in Australia, a market that counts for around 16 per cent of the carrier's total passenger capacity.

Among tech plays, AEM Holdings jumped 6.3 per cent to $2.18 - a record close.

A version of this article appeared in the print edition of The Straits Times on January 11, 2020, with the headline 'Investors relieved as US-Iran tensions ease'. Subscribe