Singtel rebounds but DBS continues slide; STI down 0.5%

THE Straits Times Index (STI) ended Thursday (Jul 18) at 3,471.16, down 18.41 points or 0.5 per cent.

Across the broader market, decliners beat advancers 285 to 277, with a volume of 1.2 billion securities worth S$1.1 billion changing hands.

Singtel topped the day’s performance ranking of STI constituents, gaining 1.3 per cent to close at S$3.06 – more than recovering from the 1 per cent decline it saw on Wednesday.

Phillip Securities Research analyst Paul Chew on Thursday downgraded the stock to “accumulate” from “buy”, citing its recent rally. Singtel is up 23.9 per cent this year, making it the second-best performer on the STI after Yangzijiang Shipbuilding (Holdings), which is up 57.7 per cent.

Nevertheless, he is positive on a recently announced transaction that monetises Singtel’s stake in its Thai associates Intouch and AIS. The transaction, part of a restructuring involving Intouch and its largest shareholder Gulf, should see Singtel booking a gain.

The three local banks ended the day in negative territory. DBS was the biggest loser, down 1 per cent to S$36.90. OCBC ended at S$15.12, down 0.7 per cent, while UOB closed 0.8 per cent lower at S$32.70.

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Jefferies has downgraded its calls on both OCBC and UOB to a “hold”, but retained DBS at a “buy”. DBS’ price-to-book premium is justified by its return on equity, Jefferies’ analysts wrote in a report dated Jul 17.

The brokerage is less optimistic on Singapore’s banking sector. “With rate cuts likely coming, the franchise improvement story already well known, and asymmetric asset-quality risk, Singapore banks will likely be in a position to defend earnings rather than drive as strong growth as before,” it said.