DBS drags Singapore market out of bed

IN A rollercoaster of a day, the market, grappling with volatility, was in a funk for many hours. But sterling results from DBS Bank singlehandedly pushed the benchmark Straits Times Index (STI) above the 3,400-point mark.

DBS rose 5.3 per cent or S$1.35 to S$26.71, and accounted for more than a sixth of the S$2.1 billion of value traded in the market. The STI rose almost 1 per cent, or 32.13 points, to close at 3,415.90.

Investors cheered DBS's fourth-quarter results, where net profit was up a third from a year ago due to strong wealth management performance, higher net interest margins, and lower allowances for credit and other losses. A special dividend of 50 cents was also declared. The bank is now trading at 1.5 times book.

The rest of its blue chip peers did not excite the market as much. Resident index heavyweight Singtel continued to disappoint after reporting results that were mainly dragged down by Indian associate Bharti Airtel.

The telco initially fell to as low as S$3.37 but clawed back some losses to close at S$3.40, down four cents. Airtel has suffered steep declines in profits ever since Reliance Jio - backed by tycoon Mukesh Ambani - entered the market with a bang in 2016. It initially gave away its services for free and subsequently undercut the rest of the market.

After sharp market declines this week, the biggest question out there has shifted from "when will this rally end" to "has the bear market started". One after another, brokers, fund houses and private banks are rushing to reassure clients and to encourage them to buy the dips. Bonds remain out of favour.

Bond house giant Pimco, for instance, is even talking about how equity valuations should be structurally higher. The equity risk premium might be permanently lower, it said.

This is because the frequency and magnitude of recessions in the US has decreased over time. Financial innovation, notably in low cost exchange-traded funds (ETFs), has led the "frictional costs of stock ownership" coming down in the course of the 20th Century.

Pimco likes commodities, noting they have traditionally done well in the later stages of a business cycle. Supply and demand are also much more balanced now, it said, compared to the oversupply situation of the last few years.

However, on Wednesday, oil prices continued to fall, along with that of other industrial metals like copper. Brent crude was trading around US$65 a barrel, down from US$67 a day ago.

"Strongly growing US oil and gas production and the softness of China's 'old economy' are likely to move even more into focus," said Swiss private bank Julius Baer, which has been bearish on commodities.

Penny activity was relatively subdued as blue chips dominated the top stocks traded by value as well as volume.

Marco Polo Marine, the recently-rescued offshore and marine vessel owning firm, surged to as high as S$0.051 before coming back down to S$0.047, up 0.1 cent. Its total market value is now S$165 million.

The firm is now trading way above the original debt to equity swap price of S$0.035, and the S$0.028 offered to nine investors who injected S$60 million.

Another standout was OKH Global, the industrial property developer which is now controlled by the husband-and-wife Chinese pair of Gordon and Celine Tang. OKH rose 11.3 per cent to S$0.059, and is now trading at 0.74 time book.

The company is up 60 per cent in the last five trading days on a spate of good news: An agreement to collaborate with a Ping An unit to develop logistics and warehousing facilities in China, followed by a jump in net profit after higher income from sale of units from completed projects.

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