Most Southeast Asian stock markets closed lower on Monday, as investors took a cautious stance fearing flare-up in the Sino-US trade negotiations, while anxiety over a possible retaliation by Beijing kept sentiment fragile. Until last week, there were expectations that US President Donald Trump and his Chinese counterpart Xi Jinping would sign a trade deal at the summit. However, the trade talks suffered a major setback last week when China proposed extensive revisions to a draft agreement.
"Tensions appear to have ratcheted up with Trump threatening to impose tariffs on all Chinese imports if a deal is not concluded within a month. Accordingly, the next few weeks would be volatile across all asset classes as the markets brace for the possibility of a no-deal," DBS Group analysts said in a note. Trade tensions between two of the world's leading economies worsened last week after Trump raised tariffs on $200 billion worth of Chinese goods, and markets have been anxious as Beijing vowed to take counter measures.
Singapore's Straits Times index, whose stocks are most exposed to global trade, was the biggest decliner in the regional market. The benchmark ended the session 1.2% lower, its weakest since April 1, pressured by financial services and consumer stocks. DBS Group, Southeast Asia's largest lender, closed 2% down at its lowest since April 2, while conglomerate Jardine Cycle & Carriage Ltd dropped 2.2% to its lowest close since April 15.
The Malaysian index, which languished at its lowest close since Jan. 21, 2016, dropped 1.9% ever since Trump announced his tariff hike plan on May 6. The Indonesian benchmark dropped about 1% to its weakest since Dec 26, 2018, dragged lower by property developer Duta Pertiwi's 20% plunge and frozen seafood products maker Sekar Bumi's nearly 17% tumble. Bucking the trend, Vietnamese stocks advanced higher, helped by a rally in utilities and technology stocks. The Philippine market was closed on Monday as the archipelago nation holds its mid-term elections.
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