Bulls And Bears

Regional stocks rally on trade talk optimism

Some markets post best results in weeks; almost all STI counters end higher

Regional stocks rallied strongly yesterday to end the week on a higher note as hopes of progress in US-China trade talks lifted risk appetite.

Some bourses posted their best showing in weeks while gains here more than made up for the week's earlier losses. The Straits Times Index rose 0.79 per cent, or 24.49 points, to 3,113.97, up 35.61 points, or 1.16 per cent, for the week.

Gainers beat losers 273 to 122, with 1.3 billion securities worth $924.72 million changing hands.

Almost all the index's 30 counters closed on higher ground, barring decliners like Thai Beverage and Jardine Matheson Holdings.

US President Donald Trump noted that trade negotiations with China in Washington had gone "very well" and will continue - a contrast to earlier fears of the talks ending early.

He also tweeted that he is set to meet Chinese Vice-Premier Liu He, raising expectations that progress could be made, especially ahead of US tariffs on some Chinese goods later this year.

But before investors get too caught up in the risk-on mood, economists from DBS Bank Group Research warned that the latest developments are unlikely to mark the beginning of a major turnaround.

"A trade deal can only offer interim relief on China-US matters, as the antagonism between the two superpowers is in fact widening," they noted yesterday.

They pointed out that the US decisions this week to blacklist some Chinese firms and restrict the visas of some Chinese diplomats show that "many areas of confrontation" have opened up beyond agriculture purchases and market access.

Meanwhile, local lender United Overseas Bank (UOB) and high-tech manufacturer Venture Corp led the gains. UOB put on 1.69 per cent to $25.92, while Venture added 1.38 per cent to $15.38.

The trade optimism also pushed some stocks with Hong Kong exposure higher amid reports of another weekend of demonstrations. Dairy Farm closed at US$6.04, up 5.59 per cent. Shangri-La closed at HK$7.86, 3.15 per cent ahead.

Some real estate investment trusts (Reits) also saw gains, with ESR-Reit's units - now trading ex-dividend - closing up 1.91 per cent to 53.5 cents after news that it had netted gross proceeds of $50 million from a more-than-twice oversubscribed preferential offering.

Likewise, SPH Reit, which is trading cum dividend, jumped 1.8 per cent to $1.13. The landlord reported a 2.1 per cent rise in distribution per unit to 1.46 cents for the fourth quarter, up from 1.43 cents last year.

A version of this article appeared in the print edition of The Straits Times on October 12, 2019, with the headline 'Regional stocks rally on trade talk optimism'. Print Edition | Subscribe