Aug 01, 2016

    Swiber's U-turn may help calm punters' jitters

    THE sudden withdrawal by troubled oil services firm Swiber Holdings of its winding-up application may help put the brakes on the slide in local stocks, analysts expect.

    The move buys time for the company to try to stage a turnaround and may also improve recovery efforts for creditors, they said.

    News of Swiber's shock liquidation application last Thursday sent the Straits Times Index tumbling 1.71 per cent on Friday, erasing 2.6 per cent in total for the week.

    But Swiber's move to discharge its provisional liquidators and put itself under judicial management could put a floor on the drop in banking stocks, analysts say.

    DBS Group Holdings lost 5.4 per cent for the week, OCBC Bank shed 4.2 per cent while United Overseas Bank sank by 4.5 per cent.

    "At least we can now see some light ahead," CMC Markets Singapore analyst Margaret Yang Yan said.

    "This is positive news for the stock market because it buys time for Swiber to get an alternative rescue plan, or new lenders.

    "If they went through liquidation, it is very highly likely that shareholders will get nothing. Private banking clients and high-net-worth investors who bought bonds or lent money to Swiber will also be facing big losses," she noted.

    Meanwhile, this week will be another significant one for corporate earnings. Traders are eyeing the release of second-quarter and first-half earnings from key blue chips Sembcorp Industries tomorrow, StarHub on Wednesdayand Perennial Real Estate Holdings on Friday.

    "StarHub's earnings could be a guide for what Singtel's earnings will be like," Ms Yang said.

    "There hasn't been a lot of positive surprises in second-quarter corporate earnings so far," she added.

    Traders are also eyeing the second-quarter results of Genting Singapore, CapitaLand and UOL Group on Thursday.

    UOB KayHian, which has a buy call on Genting Singapore, said its rival Marina Bay Sands' second-quarter results, which came in below forecasts due to weak volumes in VIP gaming and mass gaming, could have a negative impact on the Singapore-listed casino operator's stock price.

    "But the industry slowdown could have a milder impact on Genting Singapore, which has already been hard hit in the past few quarters, and seen the formation of a low earnings base," the broker added.