Investor appetite muted for Christmas, Latest Business News - The New Paper

Investor appetite muted for Christmas

This article is more than 12 months old

Markets in Singapore and across most of Asia look set for quieter trading this week as worries continue to mute investors' appetites for eating, drinking and merrymaking.

Concerns of slowing economic growth and a government shutdown sent Wall Street stocks spiralling down last Friday. Furthermore, US President Donald Trump has warned the government shutdown could be lengthy while he continues negotiating with Congress for funds to build his border fence.

White House trade adviser Peter Navarro had also said the US and China might not reach a trade deal at the close of a 90-day negotiating window unless Beijing can agree to a profound overhaul of its economic policies, accelerating declines in US stock indexes. The Nasdaq confirmed it is in a bear market, with technology and communication services stocks taking most of the hit from the sell-off.

"It is a convergence of various factors, from global growth, to quantitative tightening concerns, as well as political risk in the US and across the globe," Mr Chad Morganlander, portfolio manager at Washington Crossing Advisors, told Bloomberg.

"It is like 'Wow, man.' It is unbelievable - it is the polar opposite of what you had in 2017. Investors don't necessarily need to dive into the pool until you see some of these various issues subside."

Singapore could see technology stocks - like Venture Corp, Valuetronics Holdings and UMS Holdings - weighed down too. Analysts are largely neutral on the sector for next year, as margin pressures induced by trade tensions and volatile exchange rates pose recurring risks, among other factors.

According to RHB Research Institute data, the Straits Times Index's technology sector has delivered negative returns year to date.

In Singapore dollar terms, sector performance has dropped 25 per cent.

Falling oil prices could also pose key overhangs on commodities and offshore marine sectors.

Oil prices fell on Friday to their lowest since the third quarter of last year, amid a supply glut and global growth fears. Counters such as Sembcorp Marine and Sembcorp Industries are near their yearly lows.

In addition, RHB data showed the commodities sector's performance has been flat year to date.

Trading is also likely to thin as most Asia markets, including Singapore, will be closed on Christmas Day. The holiday will also be observed in most major developed markets, except Japan.

Heading into the last week of the year, the data docket is light.

Key data releases for Singapore will include the November consumer price index, or headline inflation, today. UOB Global Economics and Markets Research is expecting November headline inflation to come in at 0.7 per cent year on year, and core inflation at 2 per cent year on year.

November industrial production figures are also expected on Dec 26. UOB is estimating a 2 per cent year-on-year decline.

Elsewhere in Asia, the Bank of Japan will release its minutes on Wednesday, along with a speech by the central bank's governor Haruhiko Kuroda.

The central bank recently kept interest rate targets unchanged but has signalled that stimulus could be ramped up as economic outlook turns cloudy.

China will release industrial profits on Dec 27, which will be closely watched by economists and market analysts as the country manoeuvres a slowing economic growth engine and tackles tricky trade relations with the US.