Bulls And Bears

Markets muted due to North Korea fears

Relative calm over weekend but UN meeting being watched; US hurricanes another worry

Asian stocks were muted yesterday despite fears that North Korea might launch another missile over the weekend proving to be unfounded.

After rising throughout the day - hitting a high of 3,240.9 points during trading - the Straits Times Index slipped in the late afternoon to close nearly flat, dipping by 0.05 point to 3,228.51 points.

Tokyo-based Sumitomo Mitsui Asset Management senior strategist Masahiro Ichikawa told Bloomberg: "It does not feel like things are getting worse, although a bit of caution is still needed, with the market's focus likely on the outcome of the UN Security Council's vote."

The United Nations council was due to vote yesterday afternoon in New York on fresh American-led sanctions against North Korea.

Investors were also fretting over natural disasters. Irma, the second hurricane to batter the United States in the past month or so, wreaked havoc over the weekend. Hurricanes Jose and Katia are on its heels.

Federal Reserve Bank of New York president William Dudley told US media last week that the weather phenomena could affect the timing of short-term rate increases, which he felt would come on the back of the "above-trend pace" of economic growth.

In Singapore, RHB's Mr Leng Seng Choon was cautious about the impact of delayed US interest rate hikes on banks here. "We still prefer United Overseas Bank among the three Singapore banks, on the back of its stronger balance sheet strength," the analyst said in a note.

Pointing also to the possibility of further provisions for DBS Group Holdings' oil and gas loan portfolio, he added: "DBS' share price may underperform going forward, in our opinion."

DBS ended lower by four cents, or 0.2 per cent, at $20.43, while UOB slid 12 cents, or 0.5 per cent, to $23.38. The third local bank, OCBC, added four cents, or 0.4 per cent, to finish at $10.92.

In the telecommunications sector, target prices were lowered across the board by OCBC Investment Research analyst Eugene Chua, amid a gloomy industry projection of a 14 per cent to 20 per cent decline in average revenue per user over the next five years.

He maintained a "sell" call on StarHub shares - which ended the day lower by a cent, or 0.4 per cent, at $2.62 - while cutting its target price from $2.40 to $2.30.

M1 was upgraded from "sell" to a "hold" recommendation, given "the recent steep correction in its share price" after its second-quarter earnings announcement in July. Mr Chua adjusted his target price for the counter from $1.75 to $1.65.

The telco rose three cents, or 1.7 per cent, to close at $1.81.

Elsewhere in Asia, Hong Kong's Hang Seng rose 1.04 per cent, spurred on by Beijing's renewed confidence in the strengthening yuan, while Tokyo put on 1.41 per cent as the softening yen cheered exporters.

A version of this article appeared in the print edition of The Straits Times on September 12, 2017, with the headline 'Markets muted due to North Korea fears'. Print Edition | Subscribe