Apr 27, 2016

    Punters sidelined amid corporate earning fears

    A WAIT-AND-SEE attitude again prevailed on the local market yesterday as Asian markets put in another mixed performance, as investors fretted over corporate earnings.

    The Straits Times Index (STI) had a downbeat session, sinking as low as 2,873 before a late rally lifted it to 2,894.66 - still down 5.62 points or 0.19 per cent on the day. Turnover was again slow with only $881.3 million and 835.8 million shares changing hands.

    This followed the 0.15 per cent drop overnight in the Dow Jones Industrial Average, with investors taking profit ahead of the Federal Reserve April meeting yesterday.

    Other Asian markets took their cue, with Tokyo dropping 0.49 per cent and Kuala Lumpur shedding 1.28 per cent. Still, Shanghai put on 0.61 per cent and Hong Kong added 0.48 per cent, but both endured a choppy day.

    "Investors will stay cautious in the coming days, waiting to figure out where interest rates and global growth are heading, and how these factors may affect corporates here," KGI Fraser Securities analyst He Yuxuan told The Straits Times.

    A good part of that scrutiny will be on the local banks - set to announce first-quarter results soon.

    "There are several areas of concerns over their performance in the first quarter and the coming months. With a weakening Interbank Offered Rate (Sibor) and the potential delay of US rate hike, their net interest margin may deteriorate," Mr He said.

    Three-month Sibor has dropped around 20 per cent since mid-March to 1.00359 per cent.

    United Overseas Bank will announce its first-quarter results this Thursday, followed by OCBC on Friday and DBS Group Holdings next Tuesday.

    All three banks closed lower, with OCBC down 22 cents or 2.37 per cent to $9.06 and United Overseas Bank down 13 cents or 0.67 per cent to $19.39. DBS dropped two cents or 0.13 per cent to $15.68.

    The trio were among the 15 STI component stocks that ended in the red yesterday, when Sembcorp Marine again led the laggards. It closed down 7.5 cents or 4.29 per cent at $1.675 as investors warily await its first-quarter results today. Fellow offshore and marine play Keppel Corp shed five cents or 0.9 per cent to $5.50.

    The top STI gainers included CapitaLand Mall Trust, which rose five cents or 2.39 per cent to $2.14, and Global Logistic Properties, up three cents or 1.57 per cent to $1.945.