Lots for investors to consider this week
LOCAL investors will have much to mull over this week, starting with worse-than-expected China factory data out yesterday.
More volatility is on the cards with data also expected from Europe and the United States, along with financial results from some major local companies.
China's National Bureau of Statistics said yesterday that output from the nation's factories contracted last month for the first time in more than two years. The official Purchasing Managers' Index (PMI) fell to 49.8 from December's 50.1.
The worse-than-expected data could reinforce expectations that policymakers will roll out more aggressive measures to shore up growth.
Investors will also spend this week looking towards the US' jobs report for last month, due out on Friday. The data will likely influence how the Federal Reserve sets the timing and trajectory of US interest rate hikes.
Analysts are anticipating another strong month for job creation, with more than 200,000 new jobs forecast. The unemployment rate is expected to slip slightly lower than its current 5.6 per cent.
"The US labour market has been on a roll...that's not expected to change last month. So there is increasing probability that the Fed may hike rates by June or earlier, with the more hawkish looking at April," Phillip Futures investment analyst Howie Lee said.
Other highlights this week include key manufacturing data from the US, Britain and Japan.
Analysts say US manufacturing growth for last month is expected to remain strong. But the continued strength of the greenback may affect US export competitiveness, so the sector may come under pressure, remisier Alvin Yong said.
Meanwhile, Singapore's manufacturing data for last month, due out tomorrow, is expected to be weak owing to a tight labour market and high business-cost environment. "But going forward, PMI readings next month should be more reflective of the benefits of a weaker Singapore dollar," he said.
As the local corporate-earnings season kicks into high gear, analysts say the upcoming results are likely to be "mixed, if not on the soft side", owing to weakness in the global economy.
Mr Lee said: "Banks are likely to do better, although the manufacturing sector may see a dip in fortunes due to the global slowdown and the possible onset of deflation. Manufacturers may be caught in a situation where they can't raise prices and their level of debt isn't moving, which will eat into profits."
As for prospects of a pre-Chinese New Year rally? Market participants say any such upswing will likely be driven by the earnings season, which is expected to have "hits and misses", Mr Yong said. "Property companies are likely to disappoint; manufacturing appears mixed; but logistics and transport companies are expected to do well."
Market participants are watching the earnings of three companies tomorrow: SIA Engineering, which is posting third-quarter results; Osim International, which is releasing its full-year earnings and Wing Tai Holdings, set to issue its second-quarter results.
Also under the spotlight are the third-quarter results of Singapore Post on Wednesday, Global Logistic Properties on Thursday and Singapore Airlines on Friday.
Low oil prices and booming e-commerce are expected to boost SingPost's earnings, while Global Logistic's industrial properties in Japan and China are expected to earn good income.