S'pore bourse down on US factors
A CONTINUED sell-off on Wall Street and concerns over local corporate profits given the strong United States dollar kept local shares in negative territory.
The Straits Times Index fell 4.99 points to close at 3,373.6 points, with 1.26 billion shares worth $945.7 million traded.
Banking counters and the group of Jardine companies were the biggest laggards.
DBS Group Holdings dipped 0.4 per cent or seven cents to $19.52; OCBC Bank shed 0.2 per cent or two cents to $10.36; United Overseas Bank lost 0.4 per cent or nine cents to $22.55.
Fears of thinner liquidity as investors switch to buying US securities and the US dollar are still weighing on bank stocks, Phillip Futures investment analyst Howie Lee said.
But in a note yesterday, Standard & Poor's credit analyst Ivan Tan, said it sees Singapore banks as "net beneficiaries under our base-case assumption of gradual rate hikes".
"Higher interest rates will provide a revenue boost as variable rate loans are repriced upwards. Leading indicators of unemployment and bankruptcy are likely to remain low in Singapore, which would continue to support debt repayment," Mr Tan said.
"Interest on loans is likely to rise faster than the interest on customer deposits, and we believe interest margins could start to increase from the middle of this year, as repricing kicks in. The rise in margins would mark an important reversal after several years of compression," he said.
Speculation that the US central bank will move forward interest rate hikes fuelled the greenback's rise, as monetary authorities around the world move to ease policy. Most stock markets in South-east Asia rebounded as easing monetary policies in Asia helped lift sentiment.
Shanghai gained 1.8 per cent, Hong Kong added 0.3 per cent, Japan climbed 1.4 per cent and Australia advanced 1 per cent. But South Korea declined 0.5 per cent and Bangkok fell 0.35 per cent.
Meanwhile, Jardine Matheson slipped 1.6 per cent or US$1.03 to US$63.35; Jardine Strategic fell 0.3 per cent or 12 US cents to US$34.58; Jardine Cycle & Carriage dipped 0.8 per cent or 33 cents to $40.69.
DBS Equity Research downgraded Jardine C&C to buy from home.
"Our target price has been lowered to $44.95, mainly due to our reduced target price for (Indonesian subsidiary) Astra International, and a slightly weaker Indonesian rupiah versus Singapore dollar expectation."
Shares of Noble Group gained 1.1 per cent or one cent to 93 cents, with 31.4 million shares changing hands.
Brokerage house CLSA yesterday issued a "buy" call on Noble, saying the commodity trader has "one of its strongest balance sheets in a decade" after two years of winding down its asset-intensive investments, and may deliver an average 32 per cent earnings growth over the next three years.
CLSA also believes the company has provided "significant clarification" over alleged accounting irregularities.