All eyes on STI bellwethers' results
THE earnings performance of Straits Times Index constituents DBS Group Holdings, City Developments, ST Engineering and UOL Group will likely set the tone for the trading week.
"If these bellwethers announce results that exceed analyst expectations, that could generate enough positive sentiment to push the index above 2,700. If they don't, we could be stuck in the 2,580 to 2,680 range," remisier Alvin Yong said.
DBS will release its results before the market open today.
"Investors are watching for signs of deterioration in the quality of its loan portfolio, what percentage of its loan portfolio is exposed to China, oil, gas and commodities," Mr Yong said.
Two of Singapore's Big Three banks - OCBC Bank and United Overseas Bank (UOB) - have largely met analysts' expectations when they released their full-year results last week.
But there are pockets of concern. "Of UOB's exposure of $12 billion to the oil-and-gas sector, $2 billion is deemed to be vulnerable. Cash flows for these oil-and-gas customers remained healthy. The bank has not recognised non-performing loans for exposure to the oil-and-gas sector and... has not made specific provisions for these exposures," UOB KayHian said.
Also on investors' radar are the full-year results of Ho Bee Land and Hong Leong Finance to be released on Thursday.
"We are watching Hong Leong's results for the state of lending to small and medium-sized enterprises," Mr Yong said.
Traders are also watching for clues on further United States interest rate hikes when Neel Kashkari, new president of the Federal Reserve Bank of Minneapolis, speaks tomorrow.
News that China will lower transaction taxes for second-time home buyers and some first-home buyers in many cities should provide tailwind to China property developers CapitaLand and Yanlord Land Group, Mr Yong said.
The latest measure comes just two weeks after China's central bank said it would reduce minimum downpayments for first- and second-time home buyers.
Singapore CPI and industrial production data are due out tomorrow and on Friday respectively.
Meanwhile, telcos Singtel and StarHub will likely continue to be weighed down by news that the Infocomm Development Authority of Singapore unveiled a spectrum allocation framework that would facilitate the entry of a fourth mobile network operator (MNO) here, and further intensify competition in the telecommunications sector.
Singtel closed 0.8 per cent or three cents lower at $3.73 on Friday. StarHub ended 0.9 per cent or three cents down at $3.46. M1 finished at $2.54, up 0.8 per cent or two cents.
"Singtel is the least exposed among the incumbents to the entry of a new MNO, given its diversified income stream. The telco derives only 34 per cent of its funds from operations in Singapore. M1 is the most exposed, due to its domestic-driven revenue and as the smallest of the incumbent MNOs," according to Fitch Ratings.
Genting Singapore, which released weaker-than-expected fourth-quarter results last week, ended 2.1 per cent or 1.5 cents higher at 72 cents on Friday.
RHB, which has a trading buy call on the casino operator, said while the operating environment remains challenging, the worst is likely over as its management's stringent credit control has helped reduce bad debt provisions.
"We expect to see improvement in the quality of its books this year, owing to the group's more selective credit offerings and the tightening of its collection procedures over the past six to 12 months. We also find positives in management's move to reduce its holdings of derivatives and financial instruments," RHB said.