Bulls And Bears

STI falls as China data sparks concern

Economic figures below forecasts, fear that growth in second-largest economy is slowing

Singapore shares edged down yesterday in line with regional markets in the wake of weaker-than-expected economic figures out of China.

China's fixed-asset investment, factory output and retail sales data all came in under analyst forecasts, renewing concerns that growth in the world's second-largest economy is slowing.

The soft data led to the local benchmark Straits Times Index falling 9.41 points, or 0.29 per cent, to 3,220.95.

It also pushed Hong Kong stocks down 0.42 per cent. Shanghai shed 0.38 per cent and Tokyo slid 0.29 per cent.

This may be but a short blip in the market, according to Societe Generale, which said in a report yesterday that Asian stocks have some way more to go before losing steam.

Mr Frank Benzimra, the bank's head of Asia equity strategy, wrote: "The earnings growth recovery, caused by trade growth, China's economic momentum and a weaker United States dollar, continues and is driving markets."

Still, he noted three risks that could derail the Asian stock rally - a rebound in the greenback, continuing tensions over North Korea and a new economic regime after China's upcoming Communist Party National Congress.

Maybank Kim Eng Research issued a report yesterday initiating coverage of the telco sector, with analyst Luis Hilado saying he had a negative view of the sector.

"The Singapore telecom sector has not fully priced in the impending entry of new competition into the market," he wrote.

The entry of TPG Telecom will lead to higher customer retention costs for the incumbent players, which will bite into their profits, he said.

He placed a "sell" call on StarHub and M1 and a "hold" call on Singtel.

StarHub ended flat at $2.58, Singtel was unchanged at $3.67 and M1 fell half a cent to $1.785.

DBS Group dropped three cents to $20.35, despite an OCBC Investment Research analyst note yesterday saying the stock's recent correction of over 8 per cent from its high of $22.25 has made it an attractive buy.

"We expect the strong performance of global and regional markets in the third quarter to translate into better non-interest income," wrote research head Carmen Lee.

"The addition of ANZ will also drive its wealth business in 2018, both in terms of assets under management and revenue."

Other banking stocks also fell yesterday, with OCBC Bank losing two cents to $11 and United Overseas Bank slipping six cents to $23.16.

Keppel DC Reit rose 1.5 cents to $1.305, after saying on Wednesday that it has acquired its second data centre in Dublin, Ireland, for €66 million (S$106 million).

The facility is within the Ballycoolin Business and Technology Park, about 12km from the Dublin city centre.

A version of this article appeared in the print edition of The Straits Times on September 15, 2017, with the headline 'STI falls as China data sparks concern'. Print Edition | Subscribe