Singapore shares ended almost flat yesterday, starting the fourth quarter on a weak note amid widespread uncertainty including over Deutsche Bank's woes and their possible impact on the local banks.
Investors were spooked by a statement from Keppel Corp relating to an ongoing corruption probe in Brazil, even though the oil and gas sector may be in for some relief soon as moves to cut output pushed ahead.
The benchmark Straits Times Index (STI) stumbled through most of the day before ending with a gain of just 1.37 points or 0.05 per cent at 2,870.84. Only $566.6 million worth of shares were traded.
Analysts expect a tepid few months ahead.
"We see a choppy and modestly volatile October as sentiment for the Singapore equity market is likely to remain fragile heading to the November United States presidential election, ongoing corporate earnings recession and rising technical recession risk… Expect the STI to trade within a range from 2,750 to 2,950 through the rest of the year," DBS analyst Yeo Kee Yan said in a note yesterday.
One wildcard with the potential to wreak havoc on global money markets is whether the trouble-laden Deutsche is heading towards another Lehman Brothers crisis.
However, the extent of impact on DBS Group Holdings, OCBC and United Overseas Bank should be limited, Moody's vice-president and senior credit officer Eugene Tarzimanov told The Straits Times.
"The size of Singapore banks' exposure to European banks is almost three times smaller today than in early 2008. The three large Singapore banks' exposure to European banks is small. UOB reported its European banks' exposure (excluding Britain) at 0.7 per cent of assets as of June. The exposure to non-Asian banks of DBS and OCBC is around 2 per cent of assets, but this also includes US and British banks."
Still, DBS and UOB were among the 12 losing STI counters: DBS shed four cents or 0.26 per cent to $15.35 and UOB closed down three cents or 0.16 per cent at $18.80. OCBC ended flat at $8.65.
The top blue-chip loser was Keppel Corp, which yesterday said some transactions by its former agent in Brazil may have been "suspicious". It dropped nine cents or 1.67 per cent to $5.30.
Non-STI stock Sembcorp Marine was off 2.5 cents or 1.92 per cent at $1.28. Ezra Holdings was flat at 5.7 cents, but Vard Holdings rose half a cent or 3.25 per cent to 15.9 cents.
While the offshore marine sector outlook is still choppy, market watchers hope the production cut agreed recently by Opec will help stabilise oil prices.
Fourteen STI stocks rose, led by CapitaLand Commercial Trust which added three cents or 1.89 per cent to $1.62. ComfortDelGro rose four cents or 1.42 per cent to $2.85. StarHub put on four cents or 1.17 per cent to $3.47 and Singtel added four cents or 1.01 per cent to $4.01.