Apec summit divide dampens spirits

Singapore equities began the week on a dull note after Apec leaders, for the first time, failed to produce a joint communique at the recently concluded Apec summit amid trade tensions between the US and China.

The benchmark Straits Times Index (STI) slid 18.53 points, or 0.6 per cent to finish the session at 3,065.07.

Losers outnumbered gainers 213 to 172, after about 1.01 billion shares worth $703.3 million changed hands.

CMC market analyst Margaret Yang said: "Singapore market gave up most of last Friday's gain, as the tensions during Apec summit underscored uncertainties that overshadowed the prospect of the upcoming G-20 meeting, in which the market previously anticipated positive breakthrough in the US-China trade relationship.

"Besides, a dovish-biased comment made by Fed vice-chairman (Richard) Clarida last Friday led market to question the Fed's normalisation path towards 2019 as external risk increases. Local banks dropped on a weaker prospect of rising rates, which are key drivers of banks' profits over the past quarters."

Indeed, financial stocks were down for the day.

OCBC Bank lost 0.6 per cent, or seven cents to $11.09; United Overseas Bank fell 0.6 per cent, or 15 cents to $24.25; and DBS Bank slipped 0.5 per cent, or 12 cents to $23.20.

Interestingly, Singapore Exchange market strategist Geoff Howie noted that the three local banks led the share buyback tally last week, with their buybacks over the five sessions contributing 90 per cent of the week's total buyback consideration.

In particular, DBS bought back 1.4 million shares for a total consideration of about S$32.88 million, or $23.49 apiece.

Besides Jardine Matheson Holdings and Jardine Strategic Holdings which shed 2.9 per cent each, also dragging down the index was ST Engineering, which dipped 1.4 per cent or five cents to close at $3.50.

This was despite ST Engineering posting last week a 5 per cent rise in Q3 net profit to $134.6 million, on the back of improved bottom-line contributions from its aerospace, electronics and land systems divisions.

UOB Kay Hian has issued a "buy" recommendation on the counter, with a target price (TP) of $4.06, and DBS has similarly issued a "buy" rating with a TP of $4.15.

Meanwhile, multilevel marketing company Best World International bucked the trend to rise 3.3 per cent, or seven Singapore cents to close at $2.18.

RHB has maintained its "buy" rating on the counter with a new TP of $2.13, from $1.97 previously.

Similarly, CGS-CIMB has also raised its TP to $1.90 from $1.39 previously, though the brokerage is taking on a more cautious tone, maintaining its "hold" recommendation on the stock.

Despite Procurri Corp's announcement on Sunday that it intends to make its US-based joint venture Rockland Congruity its wholly owned subsidiary in a US$22 million (S$30 million) acquisition, shares of the lifecycle services and data equipment provider fell 1.7 per cent, or 0.5 cent to close at 28.5 cents apiece yesterday.

On the currency front, Phillip Futures analyst Samuel Siew noted that the US dollar held steady against most G-10 currencies after Fed policymakers sounded more concerned about a potential global slowdown over the weekend.

The research house is also of the view that the Fed will continue to normalise rates due to strong US economic data recently, as seen from the strong rebound in retail sales, coupled with inflation near the 2 per cent mark.

Mr Siew added: "With the increasing risk uncertainty from issues such as Brexit and US-China trade tensions rising, safe-haven currencies such as the US dollar could see further strength."

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