A last-minute selldown in banking counters sent local shares into negative territory yesterday, with sentiment also hit by what has been a disappointing second-quarter earnings season.
The despondent mood sent the Straits Times Index down 0.29 per cent or 8.41 points to 2,858.80.
Singtel was the major drag, slipping 0.9 per cent or four cents to $4.27.
Banks also weighed on the index. UOB fell 0.6 per cent or 10 cents to $17.55; DBS dipped 0.3 per cent or five cents to $14.81; and OCBC edged down 0.2 per cent or two cents to $8.47.
Oil and gas firm KrisEnergy extended its losses yesterday, plunging nearly 12 per cent or 1.4 cents to 10.7 cents, after posting a US$25 million (S$33 million) quarterly loss and warning of possible stress on some debt covenants.
The firm is facing pressure repaying its primary lender DBS, fuelling concerns that non-performing loans from the banks to the energy sector may be rising, analysts say.
"But the recent drop in banks' prices have priced this in, and DBS is trading at eight to nine times price to earnings ratio, which is relatively cheap among the three banks," CMC market analyst Margaret Yang said.
Ms Yang expects the STI to remain around its current levels, with the lacklustre second-quarter earnings performance keeping a lid on potential price rises.
But further falls will likely be "cushioned by cheap valuations. STI is giving 3.6 per cent dividend yield, which is good for long-term investors".
DBS Group Research noted on Monday: "The second-quarter results season... is one we'd rather forget as the earnings cut is the steepest that we have seen for many quarters. Overall, we trimmed full-year 2016 earnings by a significant 7.4 per cent and full-year 2017 by 6.8 per cent."
It also noted: "It seems the liquidity inflow into Asia as a result of Brexit, and the low interest rate environment is flocking more to other parts of Asia rather than to Singapore."
Among the most actively traded counters yesterday were commodity plays Golden Agri-Resources, which jumped 4.1 per cent or 1.5 cents to 38.5 cents, with 47.2 million shares traded. This came after the palm oil producer reported that second-quarter net profit almost quadrupled as the drop in output from last year's severe El Nino weather pattern was offset by a large tax credit.
Spackman Entertainment was also hotly traded, jumping 13.6 per cent or 1.1 cents to 9.2 cents, with 85.6 million shares traded.
Ezra gained 2.3 per cent or 0.1 cent to 4.4 cents, on trade of 62.7 million shares, while Noble Group rose 2.8 per cent or 0.4 cent to 14.7 cents with 165.3 million shares changing hands.