May 09, 2016

    No impetus for market to snap out of slumber

    THE Singapore market may find it difficult to snap out of its poor run soon, with a slew of uncertainties still weighing down on sentiment.

    From the latest United States job data to the persistent slowdown in China, the gloomy outlook leaves no reason for regional equity investors to ditch the adage of "sell in May and go away", market watchers said.

    The US job growth last month was the slowest in seven months, with a fewer-than-expected 160,000 jobs created, fresh official data released over the weekend showed.

    China will release its inflation and loans growth figures this week. Economists expect a slowdown in credit growth, although inflation could rise.

    "What is happening now is the recessionary fears that triggered the January crash may be re-emerging as people continue to see signs of stagnating growth. Because there are still so many question marks, investors will want to stay on the side," CIMB Private Banking economist Song Seng Wun told The Straits Times.

    As the headwinds gather, the local benchmark Straits Times Index (STI) may extend its losing streak after closing lower for 10 straight sessions.

    Last week, the STI pared 3.8 per cent, part of the regional sell-off that pushed the MSCI Asia ex-Japan down around 3 per cent over the same period.

    "There is really nothing to be excited about Asian equities. Investor attention will be on bonds - especially with the expectation that US interest rates may stay benign after the latest job data - and precious metals such as gold," Mr Song said.

    The price of gold, a popular safe-haven asset, rose to around US$1,290 on Friday, just below its 12-month high at US$1,293.

    Still, there are counters that offer good value among Singapore shares, said Jefferies Hong Kong strategist Kenneth Chan. "Singapore Airlines appeared on the screens based on cheap sales growth alongside positive earnings revisions. Similarly, Golden Agri-Resources offers cheap valuations and earnings upgrades. Meanwhile, Sembcorp Industries offered inexpensive quality."