Bulls And Bears

Trump's shock victory weighs on market

STI closes down as investors now await Wall St's reaction to US presidential vote

The stunning, unexpected election of Mr Donald Trump as the next United States president weighed on Singapore equities yesterday.

The benchmark Straits Times Index (STI) lost 30.36 points, or 1.08 per cent, to 2,789.88, easing from heavier losses earlier. Turnover across the bourse was 2.24 billion shares worth $1.85 billion.

"There's a bit of a knee-jerk reaction in the market. Everybody's got it wrong because they thought Hillary Clinton would win, so now they're selling," remisier Desmond Leong said. "But the thing to look out for will be how the US markets perform overnight. That will offer some indication as to how the local market will move in the coming days."

Wall Street had climbed 0.4 per cent on Tuesday.

Mr Leong noted that even as Mr Trump's victory overturned market expectations, it will take some time before any impact trickles down to Singapore stocks and companies.

"We don't really know what will come out of his policies and how they will affect companies here. That will probably only come much later when he goes into office," he said.

The market focus could well shift back to the next interest rate hike and the implications of the Trump victory.

IG market strategist Pan Jingyi said: "Our previous base case scenario for a December Fed hike had been contingent on a Democrat win, and the latest results have just promised further volatility for the markets, placing the hike at risk."

Of the 30 STI constituents, only four rose while 23 dropped. The remaining three were unchanged.

Global Logistic Properties was among the biggest losers, sliding six cents or 2.9 per cent to $2.04.

The local banks also lost ground, led by DBS Group Holdings, which slid 21 cents or 1.4 per cent to $15.12. OCBC Bank retreated seven cents or 0.8 per cent to $8.45 and United Overseas Bank shed 13 cents or 0.7 per cent to $18.41.

Outside the index, ARA Asset Management soared 21 cents or 14 per cent to $1.705 on news that founder and group chief executive John Lim is leading a group of investors in a bid to take ARA private.

The consortium comprises existing shareholders - Mr Lim, The Straits Trading Company and Cheung Kong Property Holdings - and two new partners, American private equity firm Warburg Pincus and China's Avic Trust.

Macquarie Research said in a report that it has an "outperform" rating on ARA, with a $1.95 target price. It added that ARA has "built up a very scalable platform across different product groups and geographies (and) is one of our top picks in the (smaller mid-cap) space in Singapore".

Straits Trading, which may decide to sell up to half of its direct holdings in Suntec Reit under the deal, fell six cents or 2.9 per cent to $1.98. Suntec Reit was flat at $1.67.

A version of this article appeared in the print edition of The Straits Times on November 10, 2016, with the headline 'Trump's shock victory weighs on market'. Print Edition | Subscribe