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Singapore shares drop 0.2% on Tuesday, bucking regional uptrend

ASIAN benchmarks - the exception being Singapore's Straits Times Index (STI) - picked up where Wall Street's rally left off after a US-China interim trade deal was confirmed last Friday.

Equity markets are also being lifted by better-than-expected Chinese factory and retail sales data, suggesting the trade outlook has improved alongside the continued strength of the Chinese consumer.

China, Hong Kong, Japan, Malaysia, South Korea and Taiwan were higher. Traders observed that North-east Asian benchmarks, which tend to have higher weightings on cyclically sensitive tech manufacturers, performed better.

Taiwan's Taiex Index put in the best showing of the lot, advancing 157.24 points or 1.3 per cent to 12,097.01. This is the first time since 1990 that it has closed above 12,000.

But in Singapore, the blue-chip index was mainly bogged down by the performance of the banking trio, ending Tuesday at 3,200.80, a 5.29-point or 0.2 per cent dip. Similar to the prior session, the STI spent most of the session struggling for direction before whipsawing in the final hour.

DBS Group Holdings dipped S$0.04 or 0.2 per cent to S$25.66, OCBC Bank edged down S$0.02 or 0.2 per cent to S$10.89 while United Overseas Bank (UOB) finished at S$26.24, down S$0.18 or 0.7 per cent.

While there are some concerns that the lenders may face narrowing net interest margins (NIMs) on the back of accommodative monetary policies globally, Maybank Kim Eng analyst Thilan Wickramasinghe noted that NIM could surprise on the upside since the US Federal Reserve is unlikely to adjust interest rates in 2020.

"Together with offering the highest, defensive dividend yields in South-east Asia, we remain positive on Singapore banks," he added.

Maybank's top pick is UOB due to the conservative management of its balance sheet. The brokerage sees DBS as a shorter-term play as it could dish out higher dividends given its Common Equity Tier 1 levels are in excess of regulatory and management safety requirements.

That said, a remisier told The Business Times that OCBC is trading below its historical price-to-book and also cheaper in that measure compared to the other local banks.

Among equities in the second line, Sunpower Group shares faced some profit-taking, closing S$0.01 or 1.6 per cent lower at S$0.60 after hitting a 52-week high of S$0.61 on Monday.

KGI Securities head of Singapore research Joel Ng said Sunpower stands to benefit from its Green Investments business, which is poised to register strong growth in 2020. On Monday, DBS Group Research initiated coverage on Sunpower with a "buy" call and price target of S$0.81.

Trading volume in Singapore stood at 1.16 billion securities, 94 per cent of the daily average in the first 11 months of 2019. Total turnover was S$1.08 billion, in line with the January-to-November daily average.

Across the market, decliners pipped advancers 198 to 194. Half of the benchmark's 30 counters ended in the red.