S'pore investors await Fed guidance

Throughout the week, the Singapore stock market behaved like a hiker lost on a moonless night in Grand Teton National Park in Wyoming, where the US Federal Reserve's annual Jackson Hole symposium is taking place.

Fed chair Janet Yellen and European Central Bank (ECB) president Mario Draghi were scheduled to give speeches only after the Singapore market's close yesterday, and without the guiding light from those events, investors were unwilling to take more than a few steps in the dark.

The Straits Times Index (STI) teetered between positive and negative sessions all week, heading into the weekend at 3,259.57. Yesterday, it slipped 0.38 per cent or by 12.59 points.

Gainers just slightly outpaced losers 211 to 195.

Trading activity remained muted, with 1.7 billion shares changing hands. This is about 72 per cent of the average daily volume in the first seven months of the year.

Total turnover was $988.4 million, about 82 per cent of the January-to-July daily average.

DIVERGE

The slip came as South-east Asia diverged from Hong Kong and China. The Hang Seng Index gained 1.2 per cent to end at 27,848.16, while the FTSE China A50 gained 0.28 per cent to close at 12,157.

Market observers saw the retreat in Singapore as anticipation for the central bankers' speeches.

If Mr Draghi surprises the market with a hawkish-biased speech, the euro is likely strengthen further. Ms Margaret Yang, CMC Markets analyst

"The market continued to consolidate ahead of Ms Yellen and Mr Draghi's speeches at the Jackson Hole symposium," CMC Markets analyst Margaret Yang said.

"Trading volume in the Singapore Exchange remains thin as investors intend to stay on the sidelines watching central banks' next move during the weekend."

Tepid inflation has dampened expectations for a December rate hike from the Fed, Ms Yang said. But the pace of rate hikes will be up for debate, as will the impact of the Fed's expected unwinding of its balance sheet.

Mr Draghi's speech could also contain hints for European rates.

"Although I do not expect any substantial signal from Mr Draghi or Ms Yellen in respect to monetary policy, any policy shift could have significant impact to the forex, stocks and bond markets," Ms Yang said.

"If Mr Draghi surprises the market with a hawkish-biased speech, the euro is likely strengthen further."

"The opposite will happen if he gives a more dovish-biased statement on ECB's monetary policy."

In Singapore, cautious investors sold bank stocks yesterday.

DBS Group Holdings shed 0.2 per cent or five cents to close at $20.43, while OCBC Bank declined by 0.5 per cent or five cents to settle at $10.98.

United Overseas Bank finished at $23.59, down by 0.7 per cent or 17 cents.

Property and investment group Rowsley, which is in the midst of acquiring a medical business, was the most active stock by volume.

It gained 1.7 per cent, or 0.2 cent, to finish at 11.8 cents.

Blumont Group, which is facing a 0.0182 cent per share takeover offer by Malaysian businessman Siaw Lu Howe, rose by one tick to 0.2 cent.

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