Aug 08, 2016

    Traders to read the tea leaves in China data

    WITH a slew of July economic data coming out of China, plus more big firms in Singapore lined up to announce their results, investors will have plenty to chew on over the coming days.

    Market watchers remain divided on the outlook for China, which will release its trade data today, followed by inflation figures tomorrow and industrial production figures on Friday.

    Bank of America Merrill Lynch expects the fresh data to show stable growth momentum in Asia's most important economy.

    "We expect that the year-on-year growth of industrial production and fixed asset investment ticked up (in July)," it said in a recent note.

    But HSBC economist Jing Li has warned of downside risks to China's growth after July's Caixin services purchasing managers' index moderated.

    "The uncertainties in the property sector and fragile business sentiment both dampen the growth outlook.

    "We believe more aggressive growth-supportive policies are still warranted," she said last week.

    Chinese investors have been less than bullish, and the Shanghai Composite Index ended the past week flat.

    Singapore's benchmark Straits Times Index slipped 1.41 per cent last week, as investors sold down on the recent Brexit rally.

    Still, the top Singapore-listed Chinese firms have had a relatively good year so far, Singapore Exchange data revealed.

    As of Aug 4, the 20 biggest counters in the segment have averaged a 7.4 per cent total return this year, compared to a 20.6 per cent decline in Singdollar terms for Shanghai Composite.

    China Aviation Oil Singapore has been the top performer of the bunch, with a total return of 120.8 per cent in the period. It last closed at $1.565.

    More blue-chip firms will report their results this week, with DBS Bank doing so today, Singtel and Wilmar International on Thursday, and Golden Agri-Resources and Global Logistic Properties on Friday.

    Facing concerns over its exposure to trouble-hit Swiber Holdings, DBS was hit by some recent sell-off and was down 3.8 per cent over the past week to $14.83.

    OCBC research head Carmen Lee warned that DBS' allowances may hit almost $1 billion this year. "The last time allowances were at this elevated level was during the global financial crisis," she added.

    Wilmar has also been under scrutiny following its profit warning last month.

    It dropped 1.6 per cent last week to $3.04.