Nerve-racking week ahead for investors with all eyes on US election

Will it be Mrs Clinton or Mr Trump? The results of the US presidential election should start trickling in on Wednesday, Singapore time, and investors here are likely to stay on the sidelines in the meantime.
Will it be Mrs Clinton or Mr Trump? The results of the US presidential election should start trickling in on Wednesday, Singapore time, and investors here are likely to stay on the sidelines in the meantime.PHOTO: BLOOMBERG

All eyes on US election outcome, slew of corporate earnings results

This trading week is expected to be a "make-or-break" one for stock markets across the world, including Singapore, as volatility continues to spike ahead of the closely watched United States presidential election tomorrow.

Election results should start to trickle in on Wednesday, Singapore time, and investors here are likely to stay on the sidelines in the meantime.

The election has unnerved many investors and prompted some to move into less risky products such as gold, as poll forecasts have pointed to a tightening race.

"It's going to be a make-or-break week for Singapore, especially after the US election results come out, and because there will be a slew of corporate earnings results from several STI heavyweights for the rest of the week," remisier Alvin Yong said.

IG market strategist Pan Jingyi said Asia will likely see "a week of two halves".

"The jitters in the market are likely to be sustained into midweek until the election results are made known, while the second half will be anybody's guess. This might be one of the most turbulent times we will see this year," she added.

Despite Democratic nominee Hilary Clinton's early lead, Mr Donald Trump's late momentum leading into the final vote has made the outcome too close to call.

"Should Trump win, convention calls for a selldown in the US dollar and US-dollar assets, including American equities. This could naturally also drag down global equities. Risk assets all over may likely be jettisoned, as most will head for cover," said KGI Securities trading strategist Nicholas Teo.

But Mr Yong expects a knee-jerk selldown to be followed by a quick recovery, similar to how global markets had reacted when the Brexit referendum results were announced.

"If Mr Trump doesn't win, then it may be mildly bullish for stocks," he added.

Aside from the election, healthy October US job data out last week also reinforced expectations of a Federal Reserve interest-rate hike next month - which will likely weigh on the Singapore market.

US employers added 161,000 nonfarm jobs last month, following a 191,000 gain in September that was larger than estimated.

Investors will be watching for the second-quarter results of Singtel and Sats on Thursday. Also of interest that day are the third- quarter results of UOL Group, Wilmar International, City Developments and Singapore Technologies Engineering.

The second-quarter results of Global Logistic Properties are due tomorrow. The third-quarter results of CapitaLand and ComfortDelGro are due on Wednesday and Friday respectively.

Meanwhile, the Straits Times Index (STI) continued to track lower as concerns over the weak economy and corporate earnings as well as continued strength in the US dollar against the Singdollar triggered funds outflow that dragged down blue chip stocks.

A DBS Group Research report said the STI is expected to range between 2,750 and 2,850 over the next month as the earnings season unfolds.

UOB KayHian, which remains overweight on the Singapore banking sector, said both DBS Group and OCBC's third-quarter results were above expectations.

"We prefer OCBC because of its conservative approach to recognise non-performing loans early, followed by DBS," the broker said.

A version of this article appeared in the print edition of The Straits Times on November 07, 2016, with the headline 'Nerve-racking week ahead for investors MarketsInsight'. Print Edition | Subscribe