Singapore’s market cap down 4.3% in February amid earnings hit, persistent inflation worries

THE total value of Singapore stocks declined in February, as investors remain cautious about inflation amid the full swing of the corporate earnings season.

Total market capitalisation of the 632 stocks listed on the Singapore Exchange (SGX) fell 4.3 per cent to S$815.3 billion as at Feb 28, from S$852.2 billion as at end-January, data compiled by The Business Times showed.

Thilan Wickramasinghe, head of research at Maybank, noted that continued cooling measures by the Federal Reserve and regional central banks likely drove up investor caution, resulting in pressures at the macroeconomic level.

Meanwhile, the corporate earnings season as well as several major corporate actions also had some impact on the Singapore market, Wickramasinghe said.

In February, Keppel Corporation was one of the biggest losers in value month on month, losing S$3.8 billion to hit a market cap of S$10 billion.

The counter started trading on an ex-distribution basis on Feb 23. As part of the merger between Keppel Offshore & Marine and Sembcorp Marine (Sembmarine), shareholders who owned Keppel Corp stock before the date were entitled to a distribution in specie of 19.1 Sembmarine shares per Keppel Corp share held.

In the month, inflight caterer and ground handler Sats also slipped, losing S$213.5 million in value to reach a market cap of S$3.2 billion.

On Feb 22, Sats announced it would raise S$798.8 million via a renounceable underwritten rights issue, to partially fund its acquisition of air cargo handler Worldwide Flight Services.

It planned to issue 363.1 million new shares at S$2.20 apiece, which represents around 32.3 per cent of all existing issued shares and a 20 per cent discount to Sats’ last transacted price of S$2.75 on Feb 20.

DBS and OCBC were also some of the biggest losers in value month on month. DBS lost S$4.2 billion to reach a market cap of S$88.2 billion, while OCBC lost S$1.2 billion to S$57.2 billion.

The trio of local banks reported their fourth-quarter results in February, and wrapped 2022 with record earnings on the back of higher net interest income due to rising interest rates.

DBS’ Q4 results came in ahead of analysts’ estimates, while OCBC missed consensus estimates. UOB’s were in line with forecasts.

Maybank’s Wickramasinghe said the lenders likely lost some of their year-to-date gains due to profit-taking following generally stronger results.

The chief executives of the respective banks remained cautiously optimistic about their FY2023 outlook. They expect interest rates to largely remain elevated and continue to boost their net interest margins, although they warned that costs may catch up.

Analysts also remained largely optimistic on the banks’ outlooks for 2023. Fitch Ratings noted that Singapore’s banking sector is the only one in the Asia-Pacific region with an improving outlook for 2023, on the back of higher margins and good asset quality, despite a muted loan growth forecast.

The research team expects the banks’ earnings will improve materially this year, as rising interest rates boost revenues, especially in the first half of the year.

Meanwhile, Genting Singapore was one of the biggest gainers in value month on month. It rose S$368.6 million to reach a market cap of S$12.5 billion.

The integrated resort operator said its net profit for the second half of FY2022 more than doubled to S$255.7 million, thanks to increased gaming and non-gaming revenue from the growth of Singapore’s international tourist arrivals.

The hotels and resorts sector was also the top gainer among sectors for February, rising 3.5 per cent month on month to hit a market cap of S$12.1 billion.

Meanwhile, the services sector was the top loser of the month, falling 10.7 per cent to reach a market cap of S$64.3 billion.

Wickramasinghe expects markets will remain volatile moving forward. “Weakening global macro conditions could put downside pressure. Meanwhile, a boost from China’s reopening could drive some upside.”