Trading this week has been volatile owing to the threat of a possible global war. The focus of the trade war will invariably be on Sino-US economic relations, as President Trump had slapped tariffs worth some US$50 billion on Chinese imports while the Chinese, who are trying to avoid a tit-for-tat, imposed a “symbolic” US$3 billion on US goods entering China.
Such a move is as good as telling the US that China wants to avoid an all-out trade war but is keen to avert one if possible hence Trump should take heed of such a goodwill move by China and start negotiating. No government in the right mind, especially in today’s context, will want a trade war as it serves no purpose apart from hurting the global economy.
We saw global rebound when signs of a détente appeared; the US government shows signs of a willingness to negotiate resulting in a rebound. When the Dow Jones Industrial Average fell a total of 1,149 points on the two trading days – 22 and 23 March – Asian markets fell in tandem but failed to recover promptly when the Dow jumped more than 400 points on 26 March. This seems to suggest that uncertainties have taken a toll on the market.
On 28 March with the Straits Times Index (STI) falling 56 points, the local bellwether closed at a level not seen since 12 February – a level near the 3,340 on 9 February. Fortunately for the STI, it rebounded on 29 March despite the US market not doing well owing to a weak tech sector.
In the near-term, investors should look out for 23,500 as the first level of support for the Dow while 2,350 must hold for the Straits Times Index. Failure to do so may result in further downside for both sets of indices.
I continue to be bullish about the offshore marine and the oil & gas sector. Oil prices have risen and it is sooner rather later that order flows will come in for the embattled sector. In addition, SPH may receive some reprieve after it entered into a joint venture with Kajima to develop a condominium comprising 680 units at the Bidadari site.
Gabriel Gan was a Senior Vice President at AmFraser Securities. He left to join DMG Securities (now renamed as RHB Securities) to take on a similar role. During his stints at the stockbroking firms, he dealt in equities, performed advisory role and executed corporate finance deals for his clients.
Since 2001, he has been invited by the media (both Mediacorp and SPH) for his stock market opinions. On radio, he spoke on 95.8FM for more than a decade; he now speaks every Wednesday and Thursday mornings on SPH radio 96.3 FM, delivering his opinion in Mandarin. On TV, Gabriel appeared on Channel NewAsia, the former Channel U and various Channel 8 financial segments including Good Morning Singapore, Hello Singapore and MoneyWeek. On print media, he continues to give quotes and comments on the economy and stock market for Lianhe Zaobao, Lianhe Wanbao and Shinmin Daily. On top of that, Gabriel was a columnist for the now defunct My Paper.