Investors await Fed's hike decision

STI falls 2.18 points to end at 3,511.13; market watchers observe 'indecision'

The market could not seem to decide how to move yesterday as the Federal Open Market Committee (FOMC) wraps up its meeting with a decision on an interest rate increase - or not.

Singapore's benchmark Straits Times Index rose in the morning but dipped nearer the end of the trading session to finish a mere 2.18 points or 0.06 per cent lower at 3,511.13.

Market watchers observe "indecision" and a wait-and-see attitude among investors, as they position themselves for the Fed's decision as well as the unfolding of US's imposition of trade tariffs on China at the end of this week.

"It is expectations like these that are keeping prices in locked mode," one analyst said.

Some 1.4 billion shares worth $923.6 million were traded, with losers outpacing gainers 232 to 175.

On the local bourse, Thai Beverage, which makes and sells spirits, beer, non-alcoholic beverages, and food, fell half a cent or 0.6 per cent to end at a one-year low of 80.5 cents yesterday, with 28.1 million shares changing hands.

The stock has been heavily traded for a while, and started declining after its first-quarter results released in mid-February missed expectations.

Net profit plunged 62 per cent to 2.91 billion baht (S$123 million), partly due to expenses related to its acquisition of Sabeco and a decline in spirit and beer sales.

On the acquisition, DBS analyst Andy Sim last month noted that "more clarity on plans, potential synergies, and/or tangible results are needed before the market is willing to re-rate the counter".

The stock's gearing is also high, with a net debt to earnings before interest, tax, depreciation and amortisation (Ebitda) estimated at around 4.8 times, after consolidating Sabeco's financials.

Management had indicated it could potentially deleverage using its own internal cashflow, coupled with that of the acquired entities.

Technology stocks that largely fell on Tuesday after news of Facebook's data breach showed a mixed bag of results yesterday, with Creative Technology continuing to correct from its decade high, falling 67 cents or 10.3 per cent to $5.84, and Epicentre, which resells Apple products, falling 1.5 cents or 16.7 per cent to 7.5 cents.

Among gainers were Venture Corporation, which added 30 cents or 1.1 per cent to $28.84.

It is still riding the hype of its overwhelmingly positive fourth-quarter results - a more than doubling in net earnings to $143 million on higher research and development revenue.


Electronics manufacturing services provider Valuetronics rose three cents or 3.2 per cent to 97 cents.

...more clarity on plans, potential synergies, and/or tangible results are needed before the market is willing to re-rate the counter DBS analyst Andy Sim on ThaiBev's acquisition of Sabeco

In the commodities space, Noble retreated 0.9 cent or 8 per cent to 10.4 cents on news that its founder and emeritus chairman Richard Elman has stepped down, a move that major shareholder Goldilocks hailed as a "new dawn" for the company.

Palm oil plantation company Golden Agri-Resources rose half a cent or 1.4 per cent to 35 cents after Goldman Sachs analyst Nikhil Bhandari upgraded his recommendation to "neutral" from "sell".

As the market awaits the Fed's next move, a 25-basis-point rate hike appears "fully priced-in for the March FOMC meeting and almost universally expected", said Citi Research in a report yesterday.

"The key point of interest at the FOMC meeting will be revisions to the forecasts.

"We expect dots to generally migrate higher: the median 2018 dot will likely still indicate three hikes, but the 2019 median may shift higher," it said.

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