Bulls And Bears

US-China trade hopes nudge STI 1% higher

Upbeat mood sees just 4 of 30 constituents in the red; Asian markets also end up generally

Trade made its presence felt in the markets as is all too common these days, but this time it was with a positive outcome.

News that the United States and China were finally closing in on a deal boosted sentiments yesterday.

The Straits Times Index (STI) responded by adding 30.68 points or 0.95 per cent to 3,251.08.

Markets in Australia, Japan, mainland China and Hong Kong ended higher, with Shanghai leading the way, rising 1.1 per cent.

But South Korea closed lower, unable to shake off the effects of the US-North Korea summit collapse. Malaysia also ended down.

Trading here clocked in at 1.42 billion securities worth $1.23 billion, while gainers and losers were evenly matched at 232 to 223.

Pennies saw heavy activity, with Swee Hong closing 16.7 per cent lower at 0.5 cents on trade of 48 million - more than 10 times the average over the last 15 trading days.

UOB Kay Hian's Brandon Leu said there were no key reasons for the unusually high trading volume.

But he noted that "investors might be loading up selective small cap counters with a view that the recent resilient economic reports" could see these firms improve.

Catalist-listed South Korean firm Spackman Entertainment Group ended 8.7 per cent higher at 2.5 cents on 45 million shares traded.

The buoyant mood meant that just four of the STI's 30 constituents ended the day in the red.

Casino operator Genting Singapore was the STI's most traded. It ended 1 per cent lower at $1.02 with 37.3 million shares changing hands.

DBS added 1.7 per cent to $25.50, OCBC rose 1.4 per cent to $11.25 and United Overseas Bank gained 1.1 per cent to $25.27.

Venture Corp was the STI's biggest gainer, rallying 3.5 per cent to $19.09, a reflection of the fact that its underlying business is most sensitive to global trade, CMC Markets' Margaret Yang said.

Other tech stocks thrived, with Hi-P International 11 per cent higher at $1.51 and Memtech International rose 7.8 per cent to $1.11.

While an easing of trade tensions did these counters a favour, Ms Yang noted that such shares "had been oversold last year and were embracing a strong rebound rally".

FXTM research analyst Lukman Otunuga said the key question should be on whether "all tariffs will be removed instantly, or will they be gradually dialled back".

He also queried what upside was left, "given that markets have been actively pricing in the possible resolution to the trade saga".

A version of this article appeared in the print edition of The Straits Times on March 05, 2019, with the headline 'US-China trade hopes nudge STI 1% higher'. Print Edition | Subscribe