Oct 04, 2016

    Stocks fizzle out over Deutsche Bank fallout

    SINGAPORE shares ended almost flat yesterday, starting the fourth quarter on a weak note amid widespread uncertainty, including Deutsche Bank's woes and possible impact on the local banks.

    Investors here were also spooked by further revelations on the bribery news affecting Keppel Corp, even though the oil and gas sector may be in for some relief soon as moves to cut crude production pushed ahead.

    As a result, the benchmark Straits Times Index stumbled through most of the day before ending with a gain of just 1.37 points or 0.05 per cent at 2,870.84. Overall market volume was very thin - only $566.6 million worth of shares were traded.

    Analysts expect a tepid few months ahead.

    "We see a choppy and modestly volatile October as sentiment for the Singapore equity market is likely to remain fragile heading to the November United States presidential election, ongoing corporate earnings recession and rising technical recession risk…

    "Expect the STI to trade within a range from 2,750 to 2,950 through the rest of the year," DBS analyst Yeo Kee Yan said in a note yesterday.

    A wild card is whether the trouble-laden Deutsche is heading towards another Lehman Brothers crisis.

    However, the extent of impact on DBS Group Holdings, OCBC and United Overseas Bank should be limited, said Moody's vice-president and senior credit officer Eugene Tarzimanov.

    "The size of Singapore banks' exposure to European banks is almost three times smaller today than in early 2008... UOB reported its European banks exposure (excluding Britain) at 0.7 per cent of assets as of June.

    "The exposure to non-Asian banks of DBS and OCBC is around 2 per cent of assets but this also includes US and British banks."

    Still, DBS and UOB were among the 12 STI counters that ended in the red.

    DBS shed four cents or 0.26 per cent at $15.35. UOB closed down three cents or 0.16 per cent at $18.80.

    OCBC ended flat at $8.65.

    The top losing blue chip was Keppel Corp, which was sold down after the company said yesterday that it recognised that some transactions by its Brazilian agent may be suspicious.

    It dropped nine cents or 1.67 per cent to $5.30.