Apr 11, 2016

    Traders eye corporate earnings data

    SINGAPORE equities will likely remain in a lull in the coming week, with the corporate earnings season set to kick off amid lingering concerns over global growth.

    But one development that could help add colour to the otherwise drab market is the potential buyout of Osim International.

    Founder Ron Sim on Friday upped his cash offer for the firm from $1.39 to $1.41 per share, inclusive of a two-cent final dividend.

    Still, Margaret Yang, market analyst at CMC Markets Singapore, believes that local shares are likely to "continue to consolidate", even up until the end of the month, after the release of company results paints a clearer picture of how Singapore corporates are faring amid the slowing global economy.

    "Investors need to carefully monitor the impact of regional economic weakness to corporate profits," she told The Straits Times.

    Of the blue chips, Singapore Press Holdings tomorrow will be first to announce quarterly results, followed by CapitaLand Commercial Trust on Friday.

    Traders will also be watching closely data on Singapore's first-quarter gross domestic product, which will be announced on Thursday morning.

    The economy expanded 2 per cent last year, marking a slowdown from the 3.3 per cent growth in 2014, due largely to the slump in commodity prices, which weighed down on export numbers. The Ministry of Trade and Industry has a growth forecast of 1 to 3 per cent for this year.

    The Singapore market, in line with most others in Asia, had a shaky run in the past week. The benchmark Straits Times Index slid 10.17 points, or 0.36 per cent, logging its third weekly drop.

    Tokyo bucked the regional trend to post its biggest rally in two weeks, after its finance minister pledged to take action against rapid currency movements.

    The highlight of the week was the minutes of the United States Federal Reserve's March Open Market Committee meeting that were released last Thursday, which showed most Fed governors were against raising rates this month.

    But Fed Reserve chair Janet Yellen said on Thursday that the US economy is on a solid course and still on track to warrant further interest rate hikes.

    Analysts believe that a focus on the US and crude prices could continue to set the stage for Asian equities this week.

    "Regional stock markets declined as global growth concerns came back to haunt the markets and the Fed appears to keep its tightening bias on track," said Phillip Capital in Bangkok, according to Reuters.

    "Also, the world's crude oil price is taking a roller-coaster ride along with high crude inventories.

    Traders will likely track the corporate earnings season in the US, which also begins today, for clues to the health of the country's economy. It has been forecast as the worst season since the 2008 financial crisis.

    Wall Street put on 0.2 per cent last Friday, buoyed by a rally in crude prices.

    "You still have a lot of uncertainty surrounding earnings," Peter Jankovskis, co-chief investment officer of Illinois-based OakBrook Investments, told Bloomberg. "People don't want to jump in and take a big position either way in front of an earnings number that people expect to be down."

    Also high on the radar is China's first-quarter gross domestic product and inflation data on Friday.

    On Sunday, leading oil producers will convene in Doha to discuss freezing output to help re-balance the heavily glutted crude market.