BullsAndBears

STI slips further as Turkish crisis persists

Worries about tensions between US and Turkey push Asian markets lower

The Singapore market continued to slip downwards yesterday as the Turkish crisis showed no signs of abating.

The key Straits Times Index (STI) lost 8.75 points or 0.27 per cent from 3,242.87 the day before to end at 3,234.12.

About 1.4 billion shares worth $1.14 billion changed hands in the trading session, versus the 1.8 billion shares traded for $1.06 billion on Tuesday. Losers outnumbered gainers 237 to 184.

Leading the actives was Thai Beverage, which plunged to a 21/2-year intraday low of 66 cents after reporting a 61 per cent drop in third-quarter profit on Tuesday. It recovered to end at 68 cents yesterday, having lost two cents or 2.9 per cent after 86.2 million shares were traded.

Industrial conglomerate firm Hong Leong Asia also took a hit on news that its second-quarter net loss had widened to $33 million from $18 million a year ago. About 1.4 million shares changed hands, and the counter ended 12 cents or 14.6 per cent lower at 70 cents.

Worries about tensions between the United States and Turkey pushed Asian markets lower yesterday, after they seemed to stabilise the day before. For instance, Tokyo's Nikkei index had registered gains the day before, but declined 0.68 per cent in yesterday's session.

Turkish President Recep Tayyip Erdogan has refused to back down from the dispute with Washington, and said Turkey would boycott US electronic products.

Yesterday, the country doubled tariffs on passenger cars, alcoholic drinks and leaf tobacco from the US, among other goods.

"The import duties were increased on some products, under the principle of reciprocity, in response to the US administration's deliberate attacks on our economy," Turkish Vice-President Fuat Oktay tweeted yesterday.

With the crisis triggering slides in numerous emerging market currencies, Indonesia made the surprising decision to raise its benchmark interest rate for the fourth time since May.

Of the 28 economists surveyed by Bloomberg, only seven had predicted the hike from 5.25 per cent to 5.5 per cent, while the rest had forecast no change.

Chinese markets, already routed by the Turkish crisis, were dragged down further by China's own woes as fixed asset investment and industrial output data released on Tuesday missed expectations.

The Chinese government's substantial stimulus and easing should prevent a deep contraction in the economy, said ING Asia Pacific's economics team. Nevertheless, the team has revised its gross domestic product forecast to 6.6 per cent in 2018, from 6.7 per cent.

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A version of this article appeared in the print edition of The Straits Times on August 16, 2018, with the headline STI slips further as Turkish crisis persists. Subscribe