Business

Traders preparing for volatility

Market falls for third day in a row as upcoming political and economic events call the shots

The Singapore market closed lower for the third consecutive session this week, reflecting a risk-off approach ahead of key events this week that could reshape global politics.

The Straits Times Index fell 5.26 points to finish at 3,230.49 yesterday, dragged in part by the late selling pressure on index-heavyweight DBS Bank.

Some 1.94 billion shares worth $1.05 billion were traded, with 225 counters up and 203 counters down. Among the banks, United Overseas Bank (UOB) was the sole gainer, ending the day at $23.35, up 15 cents.

A research note by Nomura said UOB sees a case for "upside bias" on its guidance of flat net interest margin, and mid-single-digit loan growth this year.

As it is, UOB's loan growth in the first quarter was up 9 per cent from a year ago.

DBS closed down six cents at $20.43, and OCBC Bank fell two cents to $10.58.

"With several major political and economic events dominating market movements, traders are positioning themselves for rising volatility," said a CMC Singapore report, pointing to the UK general elections, ECB meeting, and testimony of former Federal Bureau of Investigation director James Comey as events to watch this week.

"The UK election result will give direction to sterling and the future Brexit talks.

"Recent terror attacks in Manchester and London have led to criticism over the government's ant-terrorism measures, challenging British Prime Minister Theresa May's leadership.

"The turmoil resulted in a pause in election campaigning and rising uncertainty over the expected election result."

Over in Asia, China's foreign trade data are due today, with ING's Asian head of research Tim Condon expecting Chinese producers to pick up the pace.

"Chinese producers, unusually, are under-performing their Japanese, Korean and Taiwanese competitors," he said in a report yesterday.

"Against a backdrop of unusually strong global, US and German trade growth, we think their under-performance will be transitory."

Some stocks here saw some active play on specific corporate action. Frasers Logistics & Industrial Trust (FLT) gained 3.5 cents to $1.07 on active trading, after it said this week it planned to buy a portfolio of seven fully let or pre-committed industrial properties in Australia from its sponsor, Frasers Centrepoint.

This would mark its first acquisition since its listing last June.

"First bite after birth," said Citi Research in a report this week that kept FLT as one of its preferred pick among the small and mid-cap S-Reits (real estate investment trusts).

"With organic headwinds widespread across the S-Reit space and FLT's also reporting negative rental reversion in the most recent quarter, the potential inorganic infusion is positive for FLT."

Shares of property firm UOL Group climbed 17 cents to $7.43 amid "buy" calls from analysts.

Credit Suisse Equity Research recently initiated coverage on UOL with an outperform call and a target price of $9 a share.

"With valuation at an attractive 0.69 times price to book, steady earnings growth from recognition of locked-in residential sales and its recurring income base, and control over United Industrial Corporation a key catalyst, UOL is our preferred play on the continued recovery in Singapore's residential market," it said in a note.

Noble Group closed one cent higher at $0.325.

The Financial Times reported this week that the main banks of the embattled commodities firm are deciding whether to give Noble an extension on its credit line, or to force it into a restructuring or liquidation.

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