Banks again shore up ST index

After bouncing back from losses early in the day, Singapore shares tracked the Dow futures into positive territory yesterday, even as fears of geopolitical tensions continue to weigh on investors' minds.

The Straits Times Index (STI) ended the session up 11.26 points or 0.35 per cent at 3,186.01 after an intraday low of 3,165.22.

The reversal, led by gains in financial stocks, Genting Singapore and Global Logistic Properties, was despite losses clocked by index heavyweight Singtel. Turnover was 2.4 billion units worth $1.4 billion.

Analyst Margaret Yang of CMC Markets Singapore said yesterday: "Market sentiment was extremely fragile due to rising geopolitical tensions in Syria and North Korea. Uncertainty surrounding Trump's domestic and foreign policy, the Fed's hawkish comments on rate hikes and a shrinking balance sheet also held investors back from taking too much risk."

She noted that the first-quarter earnings season is kicking off soon and will give investors clues of future direction, adding that "positive surprises are needed to validate and sustain the recent rally in equities".

Ms Pan Jingyi, market strategist at IG Asia made the point in her morning note that a multitude of updates on economic conditions in Asia could provide more diverse leads for the region.

Respite came later in the day, with banking stocks chalking up combined gains of about seven points. OCBC shares led the pack, closing up 11 cents at $9.70. DBS added nine cents to finish at $19.25, while UOB's stock rose seven cents to end at $22.04.

The rally in the trio came after it was reported that Singapore banks' private wealth management arm's assets under management grew by 23 per cent year-on-year, compared with 6.1 per cent for the top 20 Asian private banks combined.

The growth was driven by the Bank of Singapore's inorganic acquisition of Barclays' wealth management business last year.

Nomura said it expects "Singapore's private banking arms to continue growing at a faster pace than Asia's top 20 private banks".

CHANGING HANDS

Topping the actives list was Singtel, whose stock clocked losses of more than five points. Its shares lost six cents to end the session at $3.82, with 57.7 million shares changing hands. This, after Sydney-listed TPG Telecom said it successfully bid for a share of the mobile broadband pie from the Australian government. TPG has said it will build its own 4G network, which will increase competition facing Optus, owned by Singtel.

On the other hand, Genting Singapore helped push the STI into the green. The stock ended the day at $1.10, up 3½ cents, with almost 40 million units traded.

Suntec Reit also made it to the actives list with 24.9 million units traded. The counter closed at $1.76, down 3½ cents.

Credit Suisse rated the stock as "underperform", sayingthe Reit currently trades at a yield of 5.8 per cent and "is already the most expensive" under its coverage. Moving in opposite direction was hotels, properties and speciality restaurants group Amara Holdings, whose shares were among the top 20 per cent gainers, lifted by RHB Research's "buy" call on the stock with a target price of $0.88.

Looking ahead, it remains to be seen whether the Monetary Authority of Singapore (MAS) policy review today will do much to sway investors' sentiment but Citi Research said expectations of a hawkish shift in the MAS stance have risen over the past several weeks.

This, it said, is reflected in the Singapore dollar's swing to the stronger side of the nominal effective exchange rate (NEER) band alongside better than expected performance of external oriented sectors.

"If hawkish expectations are disappointed, Sing dollar may weaken back towards mid-point of the NEER band. On the other hand, confirmation of hawkish stance may challenge some structural bearish Sing dollar positions further.

"Nevertheless, sustained outperformance of Sing dollar may be unlikely given the two-speed nature of recovery with domestic sectors lagging the external sectors and already stretched bullish leveraged investor positioning."

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