Bulls And Bears

STI up but corporate results remain a concern

Analysts unable to say for sure how market will move, with more results on the way

The local market yesterday regained its footing after Tuesday's slump, triggered by credit quality concerns in the banking sector.

But with more corporate results on the way, analysts have little conviction on how the market will move in the days ahead.

The benchmark Straits Times Index (STI) closed 16.01 points or 0.52 per cent higher at 3,088.48. Both big and small cap segments were active, with total market turnover reaching 2.54 billion shares.

"The market has reached an inflexion point, where following earlier gains people now want to see whether the confidence will be backed by reality," KGI Securities Singapore trading strategist Nicholas Teo said.

"OCBC and the oil and gas woes are one pocket of the market; investors also saw that Thai Beverage did well. The overall mood is still buoyant, but to go further we need the catalyst of more positive earnings."

Thai Beverage was the top performer of the 15 STI components that ended in the black. It rose six cents or 6.82 per cent to 94 cents on 107.1 million traded shares, after its first-quarter net profit surged 28 per cent due partly to a strong beer segment performance.

Genting Singapore - which will report its full-year results next Wednesday - rose three cents or 3.09 per cent to $1, with 45.7 million traded shares.

CapitaLand put on three cents or 0.87 per cent to $3.49. Yesterday, the property firm posted a 73.8 per cent leap in its fourth-quarter net profit.

But there were signs of unease. DBS Group Holdings, set to report its full-year earnings today, slid three cents or 0.16 per cent to $18.23. It was one of 12 STI stocks to end in the red.

Banking stocks are under scrutiny after OCBC's results showed bad loan exposure to the wobbly oil and gas sector may have deteriorated, a situation that will most likely also affect DBS and United Overseas Bank.

For OCBC, which rose two cents or 0.21 per cent to $9.45, "the non- performing loan issues are not over and could still pose an overhang to share price performance", DBS Vickers analyst Lim Sue Lin said, downgrading her call to hold.

If the results of DBS and UOB are not encouraging, banking stocks will likely be sold down even as US Federal Reserve chairman Janet Yellen hinted on Tuesday at a hawkish rate hike stance, which will broadly benefit banks.

"Banking stocks have been leading STI's gain since the start of the year. It won't be a surprise to see people taking profit," CMC Markets analyst Margaret Yang said.

Singapore Technologies Engineering, also set to report its results today, slid one cent to $3.39.

Outside the STI, Noble Group was the day's top active, rising two cents or 9.09 per cent to 24 cents on 375.3 million traded shares. This followed news that it is in talks on a potential strategic investment.

A version of this article appeared in the print edition of The Straits Times on February 16, 2017, with the headline 'STI up but corporate results remain a concern'. Print Edition | Subscribe