Business

DBS, OCBC weigh down STI

Benchmark index falls 4.09 points with turnover remaining below par

The Straits Times Index yesterday fell 4.09 points to 3,253.43, weighed down mainly by falls in DBS Bank and OCBC Bank.

Turnover remained below par, as it has for several days now, with 1.9 billion units worth $976.2 million traded. Excluding warrants, there were 174 rises versus 264 falls throughout the market.

As was the case with Tuesday's rise in the index, no specific reason could be found for the selling, with brokers describing the market as quiet and listless ahead of the US Federal Open Market Committee (FOMC) meeting that ended yesterday.

Losses sustained in the shares of DBS and OCBC contributed four points towards the STI loss.

Also weighing on the index were falls in Jardine Matheson, Cycle & Carriage and UOL.

Elsewhere, shares of brand development firm Lifebrandz jumped $0.015 or 45.5 per cent to $0.048 on volume of 48.2 million.

The company was queried by the Singapore Exchange at 3.26pm and called for a trading halt at 4.35pm.

Other actives included Moya Asia, Ley Choon and Thai Beverage.

OCBC Investment Research noted in a property sector report that resale prices of non-landed private homes rose 0.4 per cent month-on-month last month.

"While the physical oversupply situation in the domestic residential market will balance out only in 2018 and after, we recognise that an increase in collective sale transactions could bring forward the recovery in home prices as developers move quickly to replenish their land banks, which for many now lie at multi-year lows," said the broker.

It maintained its "overweight" on the sector, with top picks being CapitaLand, Wing Tai and Wheelock Properties.

On this week's FOMC meeting, the outcome of which will be known here today, Bank of America-Merrill Lynch (BOA-ML) said it expected the Fed to issue a dovish statement while underscoring its baseline forecast for rates and balance sheet normalisation.

HIKE RATES

"Most obviously, we think the Fed will hike rates by 25bp (basis points).

"We think the statement will continue to reiterate that the weakness in inflation is transitory, but may note that the inflation data is worth monitoring in coming months," it said.

Mr Tim Condon, head of Asia Research at ING Financial Markets, said there are four areas where a change in FOMC guidance could move markets: the growth outlook, the inflation outlook, the path of interest rates and the plan for the balance sheet.

"The ING baseline is no change to the forecasts for growth and inflation - recent low inflation prints are 'transitory' - no change to the guidance on rates and more details about the balance sheet unwind (possibilities include the initial amount of bonds that will be allowed to run off each month, how the cap on this amount will be adjusted and terminal balance sheet size)," said Mr Condon.

In its latest Fund Manager Survey, BOA-ML said 44 per cent of investors surveyed said equities are overvalued, the highest response on record and up from the net 37 per cent last month.

"A net 84 per cent of respondents indicate the US is the most overvalued region for equities, a new all-time high; investors find European equities (net 18 per cent) and EM equities (net 48 per cent) to be undervalued," said BOA-ML.

The bank also reported that investors' expectations for faster growth have fallen to a net 39 per cent, down 23 percentage points since January, and that 47 per cent of investors surveyed think global monetary policy is "too stimulative", the highest number in six years.

This article appears in The Business Times today. For full listings of SGX prices, go to btd.sg/BTmkts