SINGAPORE (June 10): The outlook for 2H2019 is downbeat, as analysts see slowing growth — as a result of US protectionism — and shifting supply chains affecting markets. The Straits Times Index — which started 2019 at 3,068 — is still in positive territory. Although valuations are undemanding — Bloomberg has STI’s price-to-earnings ratio at 12.6 times and its price-to-book at 1.05 times — sentiment is fragile. For instance, the STI’s downward drift has taken it below its key 200-day moving average.
Most of the damage to the market was done when Chinese telecommunications giant Huawei Technologies was added to the Entity List by the Department of Commerce’s Bureau of Industry and Security on May 15, following an executive order from President Donald Trump that effectively bans Huawei from US communications networks.
Huawei’s supply chain is vast and many companies will inevitably have to either defy the US or change their business models.