Markets Insights

Quiet week expected but it still pays to be alert

The Singapore manufacturing purchasing managers' index report today will indicate whether trade tensions have impacted the country's manufacturing sector. The January Nikkei PMI and official foreign reserves data on Thursday are also expected to offe
The Singapore manufacturing purchasing managers' index report today will indicate whether trade tensions have impacted the country's manufacturing sector. The January Nikkei PMI and official foreign reserves data on Thursday are also expected to offer fresh insight into the Singapore economy.ST FILE PHOTO

Market trading across Asia likely thin due to holidays but geopolitical risks still a concern

It may be a quiet week with the Singapore market closed tomorrow and Wednesday for Chinese New Year celebrations, but do not be too quick to ignore possible market volatility.

With trade tensions and other geopolitical risks continuing to weigh on sentiment, volatility should still be expected regardless of the light economic calendar, said Mr Lukman Otunuga, research analyst at FXTM.

He will also pay attention to the Singapore manufacturing purchasing managers' index (PMI) report today for indications of whether trade tensions have impacted the nation's manufacturing sector.

The January Nikkei PMI and official foreign reserves data on Thursday should also offer fresh insight into the Singapore economy, he said. "We see the Singapore dollar extending gains against a broadly weaker US dollar if domestic data exceeds expectations," he added.

China is closed for the Chinese New Year. Hong Kong and Singapore markets will be shut over the next two days. Thus, market trading across Asia will most likely be thin.

The week is also scant on economic data from the region, with China releasing its foreign reserve holdings only in the week. Elsewhere, the re-opening of the US government is expected to provide delayed reports on November's trade data - pertinent in relation to the US-China trade issue.

But busier central banks may define trading in Asia this week, with four major central banks in action.

There is a substantial monetary policy decision calendar from regional central banks this week, starting with the Reserve Bank of Australia and Bank of Thailand tomorrow, as well as Reserve Bank of India and Bangko Sentral ng Pilipinas on Wednesday. Their moves should be watched following the US Federal Reserve's shift to put a hold on interest rate hikes.

The US earnings season also remains in full swing. Besides the US Federal Reserve, a key driving force last week had also been earnings, with a series of earnings releases by Caterpillar, Apple, Facebook and Amazon moving markets.

Names on this week's calendar include Google's parent company Alphabet and Twitter Inc. Market watchers will continue to look for signs of corporate resilience and direction.

On the local front, SIA Engineering is scheduled to release earnings on Friday, after the market's close. Last December, the firm divested its entire stake in its subsidiary, Aircraft Maintenance Services Australia (Amsa), for A$4.5 million (S$4.5 million) in cash to aircraft leasing company Heston Services Limited. The divestment of Amsa is expected to result in a gain of about $5.5 million for SIA Engineering for the financial year ending March 31, 2019.

Earlier last month, UOB Kay Hian upgraded SIA Engineering to "buy" with a target price of $2.70, saying the stock should outperform this year after seeing an excessive 28 per cent slump last year.

The counter was a key under-performer last year amid concerns over a deteriorating top-line.

While challenges remain, UOB said the company is addressing this by growing its line maintenance business. SIA Engineering shares closed 0.81 per cent higher on Friday, at $2.50.

Other stocks to watch include property developer SingHaiyi's, after it posted higher third-quarter net profits last Friday night. The counter was last traded at 9.4 cents a share.

Also, Sevak Limited's controlling shareholder announced intentions to make a partial offer for shares of the firm.

It came just after the Singapore Exchange Regulation urged investors and potential investors to exercise caution when trading in the shares of the company.

The counter closed down 7.43 per cent to $3.49 on Friday.

A version of this article appeared in the print edition of The Straits Times on February 04, 2019, with the headline 'Quiet week expected but it still pays to be alert'. Print Edition | Subscribe