Just when the markets were anticipating a deal to be reached between US and China, the trade negotiations unexpectedly turned sour. Early this month, US President Trump raised tariffs on US$200 billion worth of imported Chinese goods from 10 percent to 25 percent. In retaliation, China also announced plans to impose taxes on US$60 billion of US imports with effect from 1 June.
To make matters worse, the Trump administration on 16 May added Huawei Technologies to a trade blacklist, putting up restrictions to make it difficult for the Chinese phone vendor to do business with US companies. In the wake of the ban, Google revealed that it will be severing business ties with Huawei which effectively signaled the disappearance of popular services and apps such as Google Play Store, Gmail, YouTube and Chrome browser on all future versions of Huawei handsets.
The subsequent 90-day delay of the ban granted to Huawei did little help to ease investors’ concerns. Last two weeks, Dow Jones Industrial Average dipped 1.3 percent while Shanghai Composite Index sank 2.9 percent.
On local shore, the Ministry of Trade and Industry on 21 May narrowed its forecast range of Singapore’s GDP growth downward to 1.5 to 2.5 percent, a clear indication that Singapore’s economic growth for the rest of this year is likely to stay muted. This came after 1Q19 economic growth came in at 1.2 percent, the lowest growth rate in almost 10 years.
Amidst growing uncertainties and increasing downside risks, investors are turning to instruments with greater yields. Barely two weeks after the initial public offering of ARA US Hospitality Trust, the local bourse saw another hospitality trust, Eagle Hospitality Trust, ready to go public this Friday on 24 May. Last fortnight, Straits Times Index lost 3.2 percent to close at 3,169.89.