POST US election, Singapore bucked weaker Asia markets on Thursday (Nov 7).
The Straits Times Index (STI) surged 1.1 per cent or 38.79 points to 3,641.78 as at noon, led by banking giant DBS, OCBC and UOB.
Across the region, however, major indices were a sea of red. Japan’s Nikkei 225 was down 0.9 per cent, followed by Hong Kong’s Hang Seng Index, which declined 0.7 per cent.
Yeap Jun Rong, market strategist at IG, said the heavy weightage towards the banking sector helped to prop up the STI.
DBS, which announced a share buyback programme and third-quarter earnings, shot past S$40 for the first time to an all-time high of S$41.66.
“The inflationary impact of a Trump presidency could mean a more gradual rate-cutting process from the (US Federal Reserve), which may translate to a slower taper in their net interest margins and hence, some earnings resilience may be expected,” he added.
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South Korea’s Kospi fell 0.5 per cent, while the FTSE Bursa Malaysia KLCI was down 0.4 per cent in early trade.
A Trump presidency is thought to not benefit trade in the region, adversely affecting the Chinese and South-east Asian markets, said Danny Khoo, Singapore head of sales trading at Saxo.
However, the STI is outperforming its regional peers because the Singapore dollar and local stocks might be seen as a “relative safe haven”, he added.
A Republican sweep is expected to lead to increased tariffs. Trump has proposed a wide range of tariffs, including 60 per cent on China and 10 to 20 per cent universal tariffs.
Analysts from BlackRock Investment Institute believe that Trump will likely make tariffs an “early priority”, though “implementation is uncertain”.
“This protectionist stance could reinforce geopolitical and economic fragmentation, a structural factor we see keeping inflation higher in the medium term,” they noted.
But Singapore is believed to be less affected by tariffs, said Wang Kai, senior equity analyst from Morningstar Research.
“If you look closer at constituents within the STI, about two-third of it are real estate trusts, financials, logistics or utilities that have nothing to do with tariffs and would not be subjected to any export regulations.
“Most of the rest of the companies are mostly regional ones that likely do not have exposure to the US,” added Wang.