Straits Times: Tue, Jul 17
WORRIES about impact of the eurozone's troubles and a slowdown in the world's biggest economies kept investors on the sidelines yesterday.
The Straits Times Index (STI) ended 3.19 points or 0.1 per cent higher at 2,998.75, after trading in a tight range of 2,990.24 to 3,004.34 throughout the day.
With the second-quarter earnings season about to get into full swing, investors and analysts are bracing themselves for updates from companies on how they are coping in a business environment fraught with uncertainty.
"With expectations of more downgrades than upgrades in the upcoming reporting season, we expect downside for earnings, especially in 2013," DBS analysts said in a research report. "Cuts in earnings could come from real estate, technology, gaming, supply-chain managers, healthcare, aerospace, offshore and marine, and shipping."
Citigroup analysts warned in a separate report that Singapore banks - which make up more than a quarter of the STI by weightage - face multiple headwinds in coming months.
"The slowdown in business conditions, as indicated by weaker-than-expected Q2 GDP growth, could lead to managements tempering their loan-growth forecasts, while net interest margin pressure appears to have resumed after a small pick-up in Q1," they said. "Markets-related income is likely to be more muted, while trading profits could fall sharply quarter-on-quarter."
Still, the banks were among the heavyweights propping up the index yesterday. OCBC Bank gained 0.9 per cent to close at $9.18, United Overseas Bank rose 0.8 per cent to $19.55, and DBS Group ended 0.7 per cent higher at $14.28.
Other index members driving the STI higher were property and beverage group Fraser and Neave (F&N), palm oil firms Wilmar International and Golden Agri-Resources, and oil rig builders Sembcorp Marine and Keppel Corp.
F&N was the biggest gainer in percentage terms among the STI stocks, rising 1.4 per cent to close at $7.90. Wilmar ended 1.1 per cent higher at $3.59, while Golden Agri gained 0.7 per cent to close at 72.5 cents.
Golden Agri is likely to benefit from a weaker rupiah as it reports its earnings in US dollars while its labour costs are incurred in rupiah, the Citi analysts said in their report. But Wilmar, which is under pressure from weak margins in its oilseeds business, could miss earnings estimates for Q2, they added.
Of the 30 STI constituents, 16 ended the day higher while nine fell and five were unchanged.
Among the stocks dragging down the index were property developers CapitaLand and CapitaMalls Asia, which ended 0.3 per cent and 0.6 per cent lower at $2.94 and $1.605, respectively.
The broader market was split evenly between gainers and losers, with most counters showing neither gains nor losses: 221 ended higher, 217 lower, and 519 finished unchanged. That excludes warrants and bonds, whose prices sometimes move in the opposite direction of a company's share price.
The FTSE ST All-Share index, which tracks 179 of the most liquid stocks here, also ended the day 0.1 per cent higher, with 68 of its members rising, 70 falling and 41 unchanged. Of the 14 FTSE ST industry sector indices, nine finished higher, led by the healthcare index, which rose 1.6 per cent.
Overall, some 1.38 billion shares worth $884.6 million changed hands, lower than the 1.75 billion shares worth $1.01 billion traded on Friday.
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