Oct 17, 2016

    Low expectations for Q3 corporate earnings

    MARKET focus could shift inwards this week as Singapore's third-quarter earnings season gathers steam, according to market analysts.

    A number of Singapore real estate investment trusts (Reits), including Keppel Reit, Frasers Centrepoint Trust, Mapletree Industrial Trust and CapitaCommercial Trust, will be unveiling results through the week, starting today.

    "The market will be keen to hear more about the managements' outlook statements and guidance on possible headwinds from rental reversions," said Nicholas Teo, trading strategist at KGI Securities (Singapore).

    Singapore Exchange is announcing its results tomorrow, followed by CapitaLand on Wednesday.

    Keppel Corporation's Thursday unveiling will be closely watched as well - "not just from the oil and gas angle, but also on the property business especially in China, where the residential property market has started to exude 'bubble-like' symptoms of late", noted Mr Teo.

    Market expectations of strong corporate earnings are low amid the slowing economy. Data last Friday showed Singapore's economy expanded well below market consensus at 0.6 per cent in the third quarter - the slowest in seven years.

    The weak gross domestic product numbers are likely to weigh on market sentiment ahead of the earnings season, said Margaret Yang, market analyst at CMC Markets.

    "Yet, given that the Singapore market has already lagged behind its regional peers in the last three months, the downside is limited as compared to other markets," she noted.

    "The risk-reward is further cushioned by cheap valuation and relatively high dividend yield."

    The third US presidential debate, set to take centre stage on Thursday morning Singapore time, may also affect investor sentiment. The markets have priced in a Hillary Clinton presidency, with control of the US Congress remaining in the hands of the Republican party in the US elections next month.

    On the economic data front, Singapore is due to release numbers on non-oil domestic exports today. China will put out a slew of key figures on Wednesday, including third-quarter gross domestic product, industrial production and retail sales, which could influence market movement.