Singapore Stocks Suffered a Bloodbath Last Friday: How Should Investors React?
The Straits Times Index (SGX: ^STI), or STI, had been performing reasonably well this year until President Trump announced sweeping tariffs.
As the US market plunged for two days in a row, the S&P 500 Index suffered a correction while the technology-heavy NASDAQ Composite Index plunged into a bear market.
The STI was not spared, either, as it fell nearly 3% in its biggest one-day drop since the pandemic.
Investors are naturally worried about the effects of these tariffs as they reverberate across the globe.
How should investors react to this news? Should you sell all your stocks?
The three local banks bore the brunt of the sell-off.
DBS Group (SGX: D05) tumbled nearly 4.9% to S$43.30 while United Overseas Bank (SGX: U11) fell 3.9% to S$35.46.
OCBC Ltd (SGX: O39) saw its share price slide 2.8% to S$16.62.
Shipbuilders, which are highly exposed to global trade, also slumped in tandem with the bellwether blue-chip index's decline.
Nam Cheong (SGX: 1MZ), a marine group specialising in the construction of offshore support vessels, saw its share price plunge 8.4% to S$0.53.
Yangzijiang Shipbuilding (SGX: BS6) slid 4% to S$2.17 while Seatrium (SGX: 5E2) fell 3% to S$1.94.
Although semiconductors were spared from the tariffs for now, analysts believe that the sector could be subject to another round of tariffs for specific products.
AEM Holdings (SGX: AWX) tumbled 3.1% to S$1.24 while UMS Integration (SGX: 558) saw its share price decline 2.8% to S$1.03.
Fast-growing companies such as iFAST Corporation (SGX: AIY) were not spared from the carnage.
The fintech saw its share price fall 4.1% to S$6.93 as investors fret over the pace of inflows following the comprehensive tariff announcement.
With the US market suffering a second day of selling as China announced retaliatory tariffs of 34% on all US imports, Singapore could be in for another bout of selling when the markets open on Monday.
The latest, and thus far most comprehensive, salvo from Trump seeks to upend years of free trade.
It's still early days as countries reel from the impact of these punishing tariffs.
Supply chains will be impacted and companies need time to assess the impact of these additional taxes.
These tariffs are sure to increase the cost of production and distribution and cause significant disruption to many businesses' plans.
There is also significant uncertainty as to how each country will respond to these tariffs, which are set to take effect on 9 April.
Larger economies may choose to retaliate the slam the US with its own set of tariffs while smaller nations may choose to negotiate and broker a different arrangement.
Trump says he is 'open to negotiations', signalling that these tariffs are not final and could be used as a bargaining tool for the US to gain the upper hand.
No one knows what the next move will be for the notoriously unpredictable Trump, but investors are fearing a worst-case scenario where a widening trade war may trigger a global recession.
In situations like these, it's recommended that investors keep a level head and continue to monitor and assess the developments.
While fear and panic are natural emotions that you will experience in the face of growing uncertainty, the last thing you want to do is to sell all your stocks.
Remember to check your investment thesis as to why you purchased these stocks in the first place.
Companies with strong brands, sturdy business models and pricing power should eventually rise above these tariffs and stand tall above their competition.
Yes, there will be a lot of short-term pain as companies react and adjust to the new reality of a possible trade war.
But what you, as an investor, should do is carefully monitor companies' commentaries to see how they are coping with the tariffs and the strategies they intend to use to mitigate their impact.
Stock markets go through various types of crises regularly.
There was the global financial crisis back in 2008-2009 which was triggered by sub-prime mortgages.
More recently, the pandemic also triggered a bear market as uncertainty reigned in 2020 over whether the COVID-19 virus could decimate the population.
Throughout these crises, the market plunged and then recovered as strong companies continued to soldier on.
Trump's tariffs are turning out to be a different type of crisis.
As investors, you should keep calm, assess the situation, and continue to monitor the companies within your portfolio.
With patience and tenacity, you can get through this crisis, just like how the previous ones were eventually resolved.
First-time investors: We've finally released our beginner's guide to investing. Read it in an afternoon, follow the principles, pick an investing style and buy your first SGX stocks within the next few hours! Click here to download it for free.
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Disclosure: Royston Yang owns shares of DBS Group and iFAST Corporation.
The post Singapore Stocks Suffered a Bloodbath Last Friday: How Should Investors React? appeared first on The Smart Investor.
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The move could add more uncertainty for American manufacturers, particularly the auto industry, which has been pushing for easier access. The Journal notes that the move gives China leverage down the line if tensions ratchet back up. From the report: In celebrating the agreement early Wednesday, President Trump noted "any necessary rare earths will be supplied, up front, by China." He did not mention any time limit on loosening those restrictions. Treasury Secretary Scott Bessent, in testimony before Congress on Wednesday, painted Wednesday's agreement as an incremental step on the longer road to a more comprehensive trade deal. "A trade deal today or last night was for a specific goal, and it will be a much longer process," he told a House committee. When asked if current US tariff levels on Chinese imports would not change again, Commerce Secretary Howard Lutnick told CNBC, "You can definitely say that." "We're in a great place with China," Lutnick said Wednesday. 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LIKEWISE, WE WILL PROVIDE TO CHINA WHAT WAS AGREED TO, INCLUDING CHINESE STUDENTS USING OUR COLLEGES AND UNIVERSITIES (WHICH HAS ALWAYS BEEN GOOD WITH ME!). WE ARE GETTING A TOTAL OF 55% TARIFFS, CHINA IS GETTING 10%. RELATIONSHIP IS EXCELLENT! THANK YOU FOR YOUR ATTENTION TO THIS MATTER!" A variety of market observers quickly weighed in hours after Tuesday evening's unveiling to suggest that the deal may not have a lot of meat on the bones — but at least relations are no longer moving in the wrong direction. The talks perhaps underscored how unlikely a comprehensive trade deal is anytime soon, noted AGF Investments Greg Valliere, "but at least relations may not worsen as talks continue throughout the summer." Both sides promised additional talks in the weeks or months ahead, but none have yet been scheduled. Veronique de Rugy, a professor at the Mercatus Center at George Mason University, suggested the talks continued to show China's leverage. "China is hurting, yes—but they still hold the upper hand on critical resources, and they know how to use them." Any lessening of tensions — and freer flow — of these mineral resources in China would be a significant boost to the global economy with China holding outsized leverage in both the reserves and processing capacity of these key building blocks for everything from computers to electric vehicle batteries to medical devices. Likewise, the US offering concessions on export controls would be a significant move after years where successive US administrations have wielded these controls — especially around the design and manufacture of semiconductors — by saying they need to be tight on China for national security reasons. Read more here. May's Consumer Price Index (CPI) report will be released on Wednesday and its expected to show that prices rose a bit faster than in April. Yahoo Finance's Allie Canal breaks down what to look out for and how President Trump's tariffs are impacting what consumers are now paying for goods and services. Read more here. Now that the US-China trade truce is back on track, both sides are keen to ensure it stays that way. China's Vice Premier He Lifeng said both sides need to now 'show the spirit of good faith in abiding by their commitments and jointly safeguard the hard-won results of the dialogue.' Bloomberg News reports: Read more here. Reuters reports: Read more here. Despite the US-China trade truce resuming the pain from President Trump's tariffs remains in China, especially among small exporters. Reuters reports: Read more here. Japan warned Wednesday that tariffs threaten its economic growth, the government said in a monthly report. Reuters reports: Read more here. Reuters reports: Read more here. Reuters reports: Read more here. A federal appeals could said on Tuesday that President Trump's sweeping tariffs can continue for now. This is a significant win for Trump, who introduced tariffs back in March and declared "Liberation Day," as he saw them as a way to free the US from what he called unfair trade practices. Bloomberg News reports: Read more here. Early summer sales for Inditex, the owner of fashion retailer Zara, came in weaker, as the company missed expectations for first quarter sales on Wednesday. President Trump's tariffs have impacted consumer demand in the US and other major markets. Reuters reports: Read more here. After weeks of back and forth, the US and China have agreed on a framework to implement the Geneva consensus that helped ease tariffs. The breakthrough came after two days of talks in London, including a marathon session on Tuesday. US Commerce Secretary Howard Lutnick said both sides had to "get the negativity out" before making progress. 'Now we can go forward to try to do positive trade, growing trade,' he said. As part of the deal, Beijing has promised to speed up shipments of rare earth metals, a crucial component for global auto and defense industries. Washington will ease export controls. This marks the first sign of movement on key issues. The proposal will now be presented to President Trump and China's Xi. Still, the discussions also did little to resolve a long-standing issue: China's trade surplus with the US. 'Markets will likely welcome the shift from confrontation to coordination,' said Charu Chanana, chief investment strategist at Saxo Markets. 'We're not out of the woods yet — it's up to Trump and Xi to approve and enforce the deal.' The meeting was set up after a phone call between the two leaders, following weeks of each side accusing the other of breaking the Geneva commitments. Both countries had used chips, rare earths, student visas and ethane as bargaining tools. Josef Gregory Mahoney, a professor at East China Normal University, said trust, not money, has been the biggest casualty of the trade war. 'We've heard a lot about frameworks,' he said. 'But the fundamental issue remains: Chips versus rare earths. Everything else is a peacock dance.' Bloomberg reports: Read more here. Sign in to access your portfolio