Bank stocks boost STI on quiet day
Benchmark index climbs 0.13 per cent to 3,206
On a day where there was little to inspire markets, the three local banks showed their heft, boosting the Straits Times Index (STI).
The benchmark index was depressed for the first half of the day, but regained its footing later on to climb 0.13 per cent or 4.23 points to 3,206.27.
Of the 30 STI constituents, 20 counters ended the day in the red, and eight in the green. The banks' stocks were down initially but recovered after lunch.
DBS Group Holdings was down by 0.53 per cent at the market reopening, but gained 0.25 per cent to $24.36 on the day. United Overseas Bank dropped 0.87 per cent at the reopening, but finished higher by 0.4 per cent at $25.34. Similarly, OCBC Bank was down 0.78 per cent earlier, but reversed losses to add 0.44 per cent to $11.53.
The three Singapore banks are slated to release full year 2018 earnings in their upcoming Q4 results. Citi research analysts expect results to be broadly in line for UOB and OCBC, with a potential return on equity disappointment for DBS.
Challenging Q4 2018 markets are likely to impact wealth management and trading income, wrote the analysts in a note. While loan growth is still robust year-on-year, momentum appears to be softening quarter-on-quarter, indicating more subdued loan growth outlook into 2019, the analysts added.
"UOB is our top pick due to its relatively defensive position versus peers - lower exposure to wealth management/China, plus a strong capital position," said the analysts.
On the local bourse, the field was almost evenly matched, with 196 decliners to 190 gainers. Turnover on the bourse stood at roughly 1.55 billion securities worth $1.06 billion.
Highly-traded shares included blue-chip Genting Singapore, which lost 2.7 per cent or three cents to $1.08 with 41.77 million shares traded. ThaiBev was also active. The counter pared 1.39 per cent or one cent to 71 cents with 41.67 million shares traded.
Other losses came from First Reit, which slid 4.39 per cent to $1.09 following a "sell" call from OCBC Investment Research. In contrast, Manulife US Reit, having recorded nearly 8 per cent higher Q4 takings, added 0.59 per cent to 85.5 US cents (S$1.20).
On the property front, City Developments fared better. The counter rose 2.4 per cent to $9.38 after financial group Jefferies upgraded its call to "buy".
Shares of Apac Realty gained 1.01 per cent to 50 cents, after it said it is acquiring the ERA master franchisor for Indonesia for up to $13.85 million in cash and taking direct ownership of the Thailand ERA master franchise through a partnership.
On the news, DBS equity analysts Ling Lee Keng and Derek Tan said: "We maintain our earnings forecast as there is no immediate impact on earnings. Furthermore, contributions from ERA Indonesia and ERA Thailand are still relatively small..."
Decliners also included SIA Engineering, which dropped 5.16 per cent to $2.39 after posting lacklustre Q3 earnings last Friday. Shares of USP Group, currently on the Singapore Exchange's watchlist, also lost 17.5 per cent to $0.066 after the group sank into the red for Q3 with a $380,000 loss.
Courts Asia, after posting net losses of $171,000 for its third quarter, closed unchanged at 20 cents. Elsewhere, regional stock markets were buffeted with headlines of US-China trade talks, set to take place in Beijing later this week.
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