Bulls And Bears

US-China trade war rattles stock markets

Asian bourses take cue from Wall Street; STI claws back early losses to dip 0.3%

Investors here and across the region remain jittery over the trade stand-off, but they showed a bit more resilience yesterday to claw back early losses.

The Straits Times Index (STI) opened 1 per cent lower but recovered a little to close at 3,223.71, down 10.57 points or 0.33 per cent.

The index has fallen by 168.58 points, or 5 per cent, since May 3, the day before United States President Donald Trump tweeted about raising tariffs on Chinese exports.

Markets in Australia, China, Hong Kong, Japan and Malaysia ended lower. The Hang Seng, which returned to trading after Monday's break, fared worst, closing 1.5 per cent down. South Korea's Kospi managed to gain 0.14 per cent.

Asian markets took cues from Monday's heavy falls on Wall Street after China ramped up tariffs on US goods with effect from next month.

Trading clocked in at 1.35 billion shares worth $1.2 billion, with losers outpacing gainers 232 to 172.

The STI recorded broad-based losses, with 19 of the index's 30 component stocks ending in the red.

DBS added 0.4 per cent to $26.10, but OCBC Bank dipped 0.1 per cent to $11.19 and United Overseas Bank slipped 0.2 per cent to $25.13.

Defensive sectors like telcos, utilities, healthcare and consumer staples outpaced the broader market. Singtel closed 0.3 per cent higher at $3.15, while ComfortDelGro ended 2 per cent up at $2.57.

As a whole, the market was broadly sold, which CMC Markets analyst Margaret Yang said "suggests investors are deeply concerned about the uncertainties surrounding the US-China trade relationship".

Interestingly, some tech-related counters registered gains, likely due to bargain hunters buying up good-value counters after multiple days of sell-offs. AEM Holdings added 3.8 per cent to 96.5 cents, Hi-P International gained 4.1 per cent to $1.27, and Venture Corp put on 0.8 per cent to $15.78.

UMS Holdings jumped 4.9 per cent to 64.5 cents after the precision engineering firm raised its stake in Catalist-listed JEP Holdings by 10.9 per cent. The married deal triggers a mandatory conditional cash offer at 15 cents a share. JEP, however, fell to close just above UMS' offer price at 15.1 cents, down 12.2 per cent.

IG market strategist Pan Jingyi expects the risk-averse sentiment to linger, given expectations that neither the US nor China will accede to each other's demands.

"The market is largely feeling its way around in the dark at this point given the mixed messages coming through," she noted.

A version of this article appeared in the print edition of The Straits Times on May 15, 2019, with the headline 'US-China trade war rattles stock markets'. Print Edition | Subscribe