Markets Insight

More volatility ahead for Singapore shares

Mr Trump giving his victory speech in New York last Wednesday, with Vice-President-elect Mike Pence and their families. Most Asian markets and emerging market currencies finished the week beaten down, amid uncertainty over the impact of a Trump presi
Mr Trump giving his victory speech in New York last Wednesday, with Vice-President-elect Mike Pence and their families. Most Asian markets and emerging market currencies finished the week beaten down, amid uncertainty over the impact of a Trump presidency.PHOTO: BLOOMBERG

Spotlight will continue to be on US in aftermath of Trump victory, even as regional economic data is released

Last week's spate of surprises - and volatility - means Singapore equities could be in for more unpredictability in the coming days.

This follows the stunning outcome of the United States election last Wednesday, when Mr Donald Trump beat rival Hillary Clinton and market forecasts to emerge as president-elect.

Most Asian markets and emerging market currencies finished the week severely beaten down, amid uncertainty over the potential impact of a Trump presidency.

The local Straits Times Index fell 19.49 points or 0.69 per cent to 2,814.6 last Friday, although it was still up by 25.8 points or 0.93 per cent for the week.

On Wall Street, the Dow Jones Industrial Average climbed 0.21 per cent to cap its best week in five years, overturning expectations that developed stock markets would tank on a Trump victory.

"We're seeing the US dollar firm up so strongly, and it is probably less because the market is looking at Trump's business-friendly policies, but more because we've got the elections out of the way. The Fed now has a clearer passage to a December rate hike," said KGI Securities (Singapore) trading strategist Nicholas Teo.

"The Singapore market will likely get its best clues from currency moves, which could see more volatility. That said, there will come a time where the emerging markets story turns negative, and Singapore will attract those looking to take flight to stability," Mr Teo told The Straits Times, noting that this means the sell-down here will probably not be as bad as compared with elsewhere in the region.

The spotlight will continue to be on the US, even as a number of key economic data from the region is set to be released this week.

Japan will unveil third-quarter gross domestic product numbers today, while China is due to release data on October's industrial production.

At home, retail sales data will come in tomorrow, followed by October's non-oil domestic exports on Thursday.

Notable movements in the local market last week included that of commodity trader Noble Group, which remained the most heavily traded. Analysts have noted that the stock, which dropped one cent or 4.9 per cent to 19.5 cents on Friday, has held up well despite the firm logging weaker third-quarter results, as traders focus on its continuing rationalising efforts.

The three local banks put up a strong showing - in particular, DBS Group Holdings, which rose 44 cents or 2.8 per cent to $16.13 on Friday, jumping 6.6 per cent for the week.

Meanwhile, stresses in the troubled offshore marine sector continue. Rig and vessel chartering group Swissco Holdings, which is struggling to restructure its debts, said on Saturday that it expects to report a net loss for the third quarter and nine months ended Sept 30, compared with a profit from the same periods a year ago.

It said the loss is largely due to the impairments on its fleet of vessels, rigs and receivables.

In addition, two wholly owned drilling rigs and two 50 per cent jointly owned drilling rigs continue to be off-charter, which "adversely affected" the performance of the group.

Debt-laden Swissco had earlier requested an extension on its earnings release, in the light of recent developments related to the arrest of four jack-up drilling rigs by a creditor and discussions with bank lenders, who have to date not agreed to its proposed restructuring plan.

"In the circumstances, the board will continue to seek and review all debt restructuring options," said Swissco.

A version of this article appeared in the print edition of The Straits Times on November 14, 2016, with the headline 'More volatility ahead for S'pore shares'. Print Edition | Subscribe