On 11 May 2018, Tun Dr Mahathir led the opposition coalition Pakatan Harapan to topple Malaysia’s previous ruling party Barisan Nasional (BN). At the age of 93, Mahathir who was previously Malaysia’s former Prime Minister for 22 years, was once again re-elected to become the oldest PM in the world.
Over the past fortnight, the opening premier of “Crazy Rich Asians”, an American drama-comedy with Singapore as the backdrop, dominated the US box office. It is the first-of-its-kind film in Hollywood to feature an all Asian cast. In the past, Asian actors in Hollywood were normally casted as kungfu masters like Bruce Lee and Jackie Chan or underground triad bosses. Crazy Rich Asians is a “Cinderella” story with a modern twist. The male lead portrays third-gen Singaporean bachelor from a wealthy real estate developer’s family, while the female lead is a Chinese American professor whose wealth pales in comparison.
On 19 August 2018 at the annual National Day Rally speech, Prime Minister Lee introduced the “Merdeka Generation Package” to help relieve medical expenses for those born in the 1950s. In addition, PM Lee also addressed the issue regarding the HDB’s 99-year lease policy and expanded the Housing Board’s Home Improvement Programme to cover newer blocks. The new schemes indicate that the government will likely increase its expenditure – a move that is largely positive for the economy.
US President Donald Trump claimed that the US is winning its trade war against China, comparing the 27 percent fall in China’s stock market against US equities that are still holding up well. Healthy performance in the US stock market has helped to alleviate sentiments for local investors as the Straits Times Index finally managed to stage a rally in July after two months of decline. However, driving both the US and Singapore stock markets are in fact strong corporate earnings.
Hong Kong-listed Wheelock and Company recently made an offer of $2.10 per share to take its Singapore subsidiary Wheelock Properties (Singapore) private. The offer represented a 20-percent premium to the closing price of $1.74 on 20 July. Not surprisingly, the privatisation offer amidst current negative sentiments came in below the fair value on the street. Nonetheless, the move also signaled the depressed valuations for the local property sector, prompting investors to relook at other property stocks again.
In the past two months, both Singapore and Malaysian equities performed rather poorly as Trump’s trade war and the change in Malaysia’s leadership were among the reasons impacting the stock markets adversely. On 9 May 2018, the political coalition Pakatan Harapan – led by former Malaysian Prime Minister Mahathir Mohamad – brought down the ruling Barisan Nasionals in the 14th General Election. Mahathir, 92 at the point in time, was re-elected Prime Minister once again.
The US Commerce Department finally lifted the sales ban on ZTE Corp (763.HK), allowing it to resume operations. Shares of ZTE rebounded 25 percent on 12 July 2018.
The lull in the market kicks off with the start of FIFA World Cup 2018. Instead of stock screeners, punters and speculators turn to their TV screens as the World Cup tournament divert attention away from the stock market. Not surprisingly, as historical volatility data from past tournaments would suggest, fund flow tends to be net negative as die-hard fans and punters bet on soccer matches instead.
Hong Kong public utilities stocks tend to buck the trend each time the Hang Seng Index sees a drastic fall. Amidst geopolitical tensions and uncertainties, top tier safe haven stocks the likes of CLP Holdings Ltd (002.HK), HK Electric Investments Ltd (2638.HK), Power Assets Holdings Ltd (006.HK), and Hong Kong & China Gas Co Ltd (003.HK) are able to attract funds.
nternational geopolitics is indeed mercurial. Before the US and China can resolve their trade dispute, a number of emerging markets showed signs of a currency meltdown. Meanwhile, over in Italy, the recently elected populist government has incited some strong anti-EU sentiments while the highly-watched G7 Summit in Canada ended up in disarray. Right now, the whole world will be watching the historic Trump-Kim Summit that is being hosted in Singapore.