STI ends flat on banking shares correction

The benchmark Straits Times Index (STI) lost 0.97 points or 0.03 per cent to 3,419.13, dragged by shares index heavyweights DBS, Singtel and Hongkong Land.
The benchmark Straits Times Index (STI) lost 0.97 points or 0.03 per cent to 3,419.13, dragged by shares index heavyweights DBS, Singtel and Hongkong Land.ST PHOTO: KUA CHEE SIONG

Local shares struggled for most of Monday despite a strong earnings season and finished about where they started.

The benchmark Straits Times Index (STI) lost 0.97 points or 0.03 per cent to 3,419.13, dragged by shares index heavyweights DBS, Singtel and Hongkong Land.

DBS alone lost over five index points, closing at $23.75, down 26 cents.

Turnover came in at 2.2 billion shares traded worth $1.2 billion with gainers trumping losers 251 to 217.

Even an expected rebound in Singapore's non-oil domestic export (NODX) growth in the October trade figures due on Friday failed to lift sentiment.

Ms Radhika Rao, an economist at DBS Group Research said: "The headline number is expected to register 8 per cent year-on-year growth amid a resumption in the electronics rally and a rebound in biomedical export sales after the industry specific plant shutdown last month."

Cosco Shipping International was one of the most active with over 81 million units changing hands. The stock rose 10.5 cents to $0.545.

ComfortDelGro jumped 5 per cent, adding 10 cents to $2.10 on a volume of 18.5 million. Last Friday, the transportation giant said net profit fell 8.2 per cent to $80.1 million for the third quarter, with the core taxi business dented by private-hire competition.

OCBC Investment Research had maintained its "hold" call on the stock with a lower target price of $2.05, saying it expects taxi margins to decline gradually due to the strong competition from Grab.

Across the region, profit-taking took place in Tokyo on the back of United States tax reform jitters, while Hong Kong's Hang Seng closed up, led by China's announcement last week that it was lifting limits on foreign ownership in the financial sector. Korean, Australian and Malaysian shares fell, while New Zealand equities rose.

Meanwhile, the incoming US Federal Reserve chairman Jerome Powell will have his plate full when he takes over from Ms Janet Yellen.

Mr Erik Weisman, chief economist at MFS Investment Management, said: "US and global growth rates have risen above potential, domestic and international labour slack continues to decline rapidly, but wage and consumer inflation remain quiescent.

"Certainly, this constellation of macroeconomic dynamics is much preferred to a world with weak growth and declining rates of inflation."

Mr Weisman believes Mr Powell is likely to tighten monetary policy gradually, "letting the US economy run above potential until he actually sees demand-push inflation".