Singapore, Malaysia markets rise; Taiwan drops 1.6% as Trump sets new tariff rates

[SINGAPORE] Singapore stocks opened slightly up on Friday (Aug 1), while Malaysia markets jumped and Taiwan slumped, following the announcement of US President Donald Trump’s global tariff rates.

Malaysia, Thailand and Cambodia were hit by 19 per cent levies, while Taiwan will face a 20 per cent rate on its US exports. The global baseline rate will be kept to 10 per cent. This comes ahead of the Aug 1 deadline.

Singapore is likely to remain at the 10 per cent baseline rate, which Prime Minister Lawrence Wong said earlier was “not ideal” but something the country can “live with”.

The Straits Times Index had a modest gain of 0.2 per cent shortly after the market opened, up 8.52 points to reach 4,182.29. This comes after a 2.3 per cent drop across six days from its record high of 4,273.05 on Jul 24.

The trio of local banks were all marginally up at the open. DBS rose 0.1 per cent or S$0.06 to S$47.97. UOB was up 0.4 per cent or S$0.16 at S$36.35, and OCBC was up 0.5 per cent or S$0.08 at S$16.95. Pre-market open, OCBC announced that second-quarter profit fell 7 per cent to S$1.82 billion and declared a quarterly dividend of S$0.41 a share.

DBS analysts stated that the downside direct impact of the tariffs on Singapore would be “contained”. However, they warned that its economy will still face indirect pressure.

“The city-state’s exports and economy will still face indirect negative impact through its trade-linkages with key trading partners, with further threats from sectoral tariffs like semiconductors and pharmaceuticals that are still under review,” said DBS economists Radhika Rao and Chua Han Teng.

Among Asia markets, South Korea’s Kospi slumped about 3.9 per cent to 3,127.79 points, but was down 3.1 per cent at 3,144.56 as at 11.30 am in Singapore. The losses were driven largely by government proposals on Thursday to hike corporate taxes.

Trump said on Wednesday that the US would charge a 15 per cent tariff on imports from South Korea, down from 25 per cent if it had not struck a deal, marking a slight win for the East Asian economy.

Taiwan’s Taiex dived 1.6 per cent before paring losses to 0.3 per cent down at 23,467 points, as at 10.54 am Singapore time.

On the other hand, Malaysia’s Kuala Lumpur Composite Index was up 1.1 per cent at 1,529.97 points as at 11.17 am, and Thailand’s SET inched up 0.02 per cent at 1,242.63 points.

The Singapore dollar continued its week-long drop at 1.2978 per US dollar as at 11.30 am, weakening from 1.2768 on Jul 23. Spot gold traded 0.1 per cent higher around US$3,294.

Lorraine Tan, Morningstar director of equity research in Asia, said that overall, the tariffs are relatively expected for Asia. She added that the levies for South Korea, Japan and South-east Asian countries were not outlandish. “We think the markets should shrug this news off.”

However, Morningstar’s Asia equity market strategist Kai Wang cautioned that a 90-day extension to the tariff truce with China could be viewed negatively by investors. Hong Kong’s Hang Seng Index was down about 2.7 per cent for the week, its first drop since Jul 4, even as it rose 0.1 per cent as at 11.30 am on Friday.

“The extension is signalling that there may be some snags in talks which have the potential to fall apart entirely,” he said.