Bulls And Bears

STI inches up on hopeful Chinese data

Q3 earnings not expected to impress but market would have priced in headwinds

Singapore shares snapped a five-day losing streak with a small gain yesterday, joining a region-wide rally spurred partly by some encouraging Chinese data.

Yet, storm clouds could be gathering over the local market as it enters the third-quarter results season, which is unlikely to offer any pleasant surprises that might calm already jittery market sentiments.

Regional markets were mostly up. In China, overnight news of a sharp fall in exports for last month was somewhat offset by better-than-expected inflation figures, helping Shanghai to add 0.08 per cent and Hong Kong 0.88 per cent.

Tokyo rose 0.49 per cent while Bangkok rebounded 4.59 per cent.

Singapore's benchmark Straits Times Index (STI) gained 9.76 points or 0.35 per cent to reach 2,815.24 yesterday, after having lost some 2.7 per cent since Oct 6. For this week, it shed 2.09 per cent - the worst stretch in over two months.

And investors might have more reasons to fret, with the bulk of listed firms set to report third-quarter earnings starting next week.

"The market already has a sense of what to expect, given disappointing third-quarter growth," cautioned CMC Markets analyst Margaret Yang. Official advance estimates showed Singapore's economy grew only 0.6 per cent in the period.

Among those announcing results next week are M1, the Singapore Exchange, Ascendas Real Estate Investment Trust (Reit) and Keppel Corp.

Keppel Corp was among 11 STI losers yesterday, closing down four cents or 0.75 per cent at $5.29. Ascendas Reit slipped two cents or 0.82 per cent to $2.42, while the Singapore Exchange was down two cents or 0.28 per cent at $7.25.

Meanwhile, 14 counters rose, led by Jardine Cycle & Carriage, up $1.17 or 2.92 per cent at $41.17, and Thai Beverage, up 2.5 cents or 2.7 per cent at 95 cents. The stock probably benefited from a regional buy-in for Thai stocks and the baht.

Banyan Tree also reaped gains, rising half a cent or 1.27 per cent to 40 cents. The company runs eight hotels and resorts in Thailand.

"Thailand has a resilient tourism industry. Having experienced past adversities including Sars in 2003, floods in 2011 and bombings last year, it has proven itself time and again, with the versatility to rebound strongly," a spokesman told The Straits Times.

Noble Group surged 1.1 cents or 6.36 per cent to 18.4 cents with 296.5 million shares traded - again the most active counter. SunMoon Food was also hotly traded, up 0.4 cent or 3.39 per cent at 12.2 cents with 74 million transacted shares.

Investors can perhaps take comfort in the fact that shares are so cheap, they might not have much more downside.

"Singapore shares have a price-to-earnings ratio of around 12 times. The regional average is 15 to 20 times. So unlike in the rest of Asia, the headwinds are more or less priced in already," said Ms Yang.

A version of this article appeared in the print edition of The Straits Times on October 15, 2016, with the headline 'STI inches up on hopeful Chinese data'. Print Edition | Subscribe