Singapore shares drifted lower yesterday ahead of key central bank meetings in the United States and Japan later this week.
The Straits Times Index closed down 0.53 per cent or 15.50 points to 2,929.85, weighed down by the three banks and Singtel. OCBC fell 1.4 per cent or 13 cents to $8.85, UOB dropped 1.1 per cent or 21 cents to $18.84 and DBS dipped 0.3 per cent or five cents to $16.24. Singtel fell 0.5 per cent or two cents to $4.28.
Despite a positive Wall Street lead on Friday, Asian stocks failed to hold on to gains as traders seem to be turning cautious ahead of the outcome of the central bank meetings - the US on Thursday and Japan on Friday. "The market is just taking a breather. Any slight pullback is still healthy after the past week's rally," said Mr Lee Yu Sheng, a dealer with Maybank Kim Eng.
A near-term pullback to 2,860 is expected as company earnings for the second quarter have been lacklustre and many have seen earnings cut so far.
Traders are also eyeing the quarterly results of OCBC Bank and United Overseas Bank on Thursday. "We are watching for their non-performing loans' exposure to the oil and gas sector, their provisions for bad loans and their foreign exchange trade income in light of recent volatility in currencies," Mr Lee said.
Mr Nicholas Teo, a trading strategist with KGI Fraser Securities, said: "Despite low valuations and support of a modest dividend yield, the outlook continues to remain bleak for Singapore banks. Each lender continues to grapple with the slowdown in new loans take-up, a deteriorating quality of their loan books and uninspiring interest margin extension."
Penny plays were the most actively traded, with QT Vascular up 5.8 per cent or 0.5 cent to 9.1 cents with 49.3 million shares traded. Spackman Entertainment gained 5.8 per cent or 0.5 cent to 9.1 cents with 46.9 million shares traded.
Raffles Medical slipped 3.4 per cent or 5.5 cents to $1.565 after its second-quarter earnings missed expectations, due to higher operating expenses. OCBC Investment Research maintained a "Hold" call, noting that revenue growth was offset by higher costs such as staff costs due to recruitment for the new medical centre at Holland Village.
Weaker oil prices sent oil and gas plays lower yesterday. Ezra Holdings fell 3.3 per cent or 0.2 cent to 5.8 cents with 42 million shares traded. Ezion Holdings shares dropped 8.1 per cent or three cents to 34 cents, with 31.3 million shares traded.
Keppel Corp dipped 0.5 per cent or three cents to $5.47. RHB Securities, which has a buy call on it, noted that "at the current price, the group is being valued solely on its property, infrastructure and investment wings, with zero value pegged to its offshore and marine segment." It said: "We believe its property and infrastructure pillars will provide earnings support."