Feb 29, 2016

    Local stocks may gain in coming weeks

    SINGAPORE shares went through a bumpy ride last week, with investors closely watching oil prices, global economic data and corporate earnings at home.

    Some good news emerged to give the regional markets a lift and may pave the way for further gains in the near term, even if the outlook remains uncertain, said analysts.

    After Asian markets closed on Friday, official data from the United States showed that the world's biggest economy expanded by a better-than-expected 1 per cent year-on-year in last year's fourth quarter.

    The Dow Jones Industrial Average slipped 0.34 per cent but mostly on knee-jerk concerns over further interest rate hikes as the US economic recovery stays on track.

    Before that, Chinese central bank governor Zhou Xiaochuan sent out a signal that more monetary easing will be on the way to boost China's stalling growth, sending CSI 300 - which tracks the top blue chips in Shanghai and Shenzhen - up 1 per cent.

    In Singapore, the Straits Times Index closed up 1.77 per cent on Friday amid the slew of positive signs, including a slim recovery in oil prices to above US$35 per barrel.

    With the STI twice holding the 2,600 level in the past two weeks, the index may be able to gain further within a range of 2,570 and 2,700 in coming days, remisier Alvin Yong noted.

    "The market conditions now are definitely better than say two months ago. However, we are still dependent on how the Dow performs and whether there will be more easing announced by the European Central Bank in its next meeting on March 10," he added.

    Last week, the market watchers learnt that Noble was hit by its first annual loss since 1998 due to impairments made for weak coal prices, a move which divided analysts.

    Noble Group suffered a US$1.67 billion (S$2.3 billion) net loss last year, after it posted a US$1.2 billion exceptional non-cash loss to account for the impact of weak coal prices on asset value.

    Critics point to the write-off as a sign that Noble might have been too aggressive with its valuation but others saw it in a different light.

    "We believe the impairment reduces uncertainties regarding its valuations of derivative assets on its balance sheet given the more conservative coal price assumptions," Fitch Ratings said in a statement on Friday.

    "In addition, the results showed Noble continues to be able to generate cash flow from its operations and is committed to reducing working capital."

    Noble rose 5.9 per cent on Friday to 35.5 cents.

    Another commodity firm will come under the spotlight this week - commodity trader Olam will report its latest financials today.

    Marine firm Ezion and Swiber will also report their latest quarterly earnings and, if last week's marine firms results are anything to go by, the outlook does not look good.

    ST Engineering saw weaker earnings last year due to its struggling marine business.

    The market may have also been disappointed by the fact that ST Engineering lost out on its bid for the next-generation Electronic Road Pricing project.

    But the aerospace and defence conglomerate remains a cash-rich firm - with $944.1 million cash and cash equivalents - despite setting aside $497.6 million for dividend payouts, while its diversified portfolio will continue to ensure earnings consistency.

    It last closed up four cents or 1.42 per cent at $2.85.