Singapore shares close lower on Wall Street sell-off, further oil slide

THERE were no surprises in Monday's trading as the Straits Times Index dropped 37.76 points or 1.44 per cent to 2,593 following Friday's Wall Street blowout and a slide in oil to US$28 per barrel.

Banks were the worst hit this time. There was also pressure on offshore and marine stocks though Keppel Corp, which is due to release its 2015 results on Wednesday, managed a S$0.01 rise to S$4.85 with 10.8 million shares done.

Overall turnover was 1.45 billion units worth S$1.2 billion, the ninth consecutive day that business has the crossed S$1 billion mark. Excluding warrants, there were 95 rises versus 351 falls.

All three banks were whacked - DBS dropped S$0.41 or 2.8 per cent to S$14.23, UOB S$0.50 or 2.8 per cent to S$17.10 and OCBC S$0.17 or 2.1 per cent to S$7.78.

RHB, however, in a Jan 15 report maintained an "overweight" on the sector. It noted that although concerns over China's slowing growth are not new, growing predictions that oil prices would stay at depressed levels are stoking fear that the banks would soon be hit with rising defaults in their oil and gas exposures.

"As at end-Sep 2015, exposure to the oil & gas sector amounted to S$22b for DBS, S$12.8b for OCBC and S$10.2b for UOB," said the broker.

It drew a comparison with non-performing loans (NPLs) during the US sub-prime crisis when NPLs for the three ranged from 7-10 per cent and said at present prices, a 10 per cent default rate is close to being priced in.

In the commodities segment, the slide in Noble Group continued with the counter dropping S$0.02 to S$0.275 on volume of 52.1 million.