The trade negotiations between US and China from 7-9 January in Beijing ended well with positive comments coming from both sides, indicating a sign of progress towards the right direction. This helped to buoy sentiment as investors turned hopeful that a deal to resolve the differences could soon be reached.
Meanwhile President Trump walked out of a border meeting on 9 January after clashing with the Democrats with regard to the wall funding. As a result, the partial government shutdown continued marking its 20th day. Dow Jones Industrial Average gained 3.7 percent over the last two week closing at 24,001.92.
China’s Purchasing Managers’ Index for December contracted for the first time in 19 months since May 2017 coming in at 49.7, attributable to weaker domestic and export orders. It looks increasingly likely that the Chinese economy may continue to come under greater pressure. In a bid to reduce the risk of a sharper slowdown, People’s Bank of China announced on 4 January that it was cutting banks’ reserve requirement ratios by 100 basis points, the first in 2019 and the fifth since 2018 to release about Rmb800 billion of liquidity for new lending.
Hang Seng Index rose 4.6 percent last fortnight while Shanghai Composite Index climbed 2.4 percent.
On local shores, Singapore’s 4Q18 Gross Domestic Product slowed to 2.2 percent according to advance estimates from the Ministry of Trade and Industry released on 2 January. Full-year economy growth stood at 3.3 percent, 0.3 percentage points lower than the 3.6 percent growth achieved in 2017. Straits Times Index advanced 4.8 percent last fortnight to finish at 3,198.65.