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Singapore shares close lower for 11th time out of 12 sessions
GAINS in Hong Kong, a 100-point rise in the Dow futures and a firm opening for Europe on Tuesday could not prevent the Straits Times Index (STI) from registering an 11th loss in 12 sessions when it dropped 24.91 points to 2,741.15.
Falls in the three banks were the main drags, while support for the index came from modest gains for Hongkong Land and CapitaLand.
Turnover was a weak 857 million units worth S$913.1 million and excluding warrants, there were 160 rises versus 224 falls.
For the umpteenth session this year, banks drove the STI. All three have reported first quarter earnings which were largely unspectacular but within expectations, while analysts have almost unanimously expressed concerns over banks' exposure to the troubled offshore and marine (O&M) sector.
"The Moody's report could be why the banks have been so weak," said a dealer. Last week, Moody's Investor Service said it expects asset quality of all three banks will continue to deteriorate because of slowing economic and trade growth in Asia, and because of stress on oil and gas borrowers in Singapore.
"For the three banks, we expect rising pressure on profitability, due to additional provisioning - particularly as the banks' specific provisions for oil and gas companies are low - because these loans are collateralized by specialized oil and gas equipment,'' said Moody's.
"We expect that oil and gas exposures will require additional provisioning, because the value of this collateral will fall further, as global oil prices remain low."