Bulls And Bears

STI climbs 0.8% on the back of Beijing boost

Late surge in market after China says it will not react hastily to recent US tariff hike

The market was a game of two halves yesterday, witnessing a late surge after Beijing indicated it does not intend to react hastily to Washington's most recent tariff increase.

Investors have been jumpy for months on the back of the US-China trade scuffle, so the positive tone from China's Ministry of Commerce lifted moods.

The Straits Times Index (STI), down by as much as 15 points before the Beijing boost, rallied to close at 3,081.83, up 25.36 points, or 0.8 per cent. The surge in the later session put the blue-chip index back in the black for this year.

Other key regional markets were mainly lower, with many closing before news of the latest trade development broke. China, Japan, South Korea were in the red, while Australia and Malaysia posted gains.

While the STI ended higher, sentiment has been wavering daily and is likely to stay that way, leaving many guessing whether to hit the buy or sell button.

"There is this constant threat of another mini-risk meltdown just waiting to happen on the next Trump tweet, but it's hard to ignore the dovish central bank messaging," VM Markets managing partner Stephen Innes said.

"I suspect everyone, including Singapore's and China's central banks, will loosen policy to support the economy and buttress investor sentiment. I don't think investors really want to sell equities with central bank easing on the cards."

Trading here came in at 1.18 billion shares worth $1.02 billion, with gainers trumping losers 234 to 172.

Yangzijiang Shipbuilding, which gained 2.8 per cent to 91 cents, kept its place as the most active counter on the STI, with 37.5 million shares changing hands.

The late turn towards more risk-taking lifted the banks. DBS climbed 0.9 per cent to $24.24, OCBC gained 0.6 per cent to $10.57 and United Overseas Bank advanced 1.5 per cent to $24.78.

Among real estate investment trusts (Reits), Mapletree Commercial Trust - the most likely pick for STI inclusion next month - continued to thrive. It added 2.3 per cent to $2.24, a 52-week high. The Reit has gained 5.2 per cent this week.

Singtel recovered from early losses to close unchanged at $3.15. Fellow telco StarHub closed 0.8 per cent down at $1.30.

Citi Research analyst Arthur Pineda said in a note dated Aug 27 that while yields appear attractive, StarHub's "defensiveness is in question as weak operating trends are likely to persist through the second half of 2019".

A version of this article appeared in the print edition of The Straits Times on August 30, 2019, with the headline 'STI climbs 0.8% on the back of Beijing boost'. Print Edition | Subscribe