Singapore banks rallied on satisfying DBS 4Q earnings, which was boosted by higher Net Interest Margin (NIM), moderate loan growth and provision normalisation.

Higher interest income underpinned weakness in non-interest income, which fell 4% as a result of softening investment banking, asset management and brokerage fees. OCBC and UOB’s earnings is due to announce this Friday morning.

Yesterday, telcos were among the worst performers, attributing to disappointing earnings in Singtel and StarHub. Rising crude oil prices lifted share prices of Keppel Corp and SembCorp Industry, although Sembcorp Marine was traded lower. Profit-taking activities were seen in Thai Beverage, whose share price came off from last Friday’s strong gain. Singapore Airlines (SIA) surged 2.2% to S$9.98 as analysts said SIA’s recent earnings showed encouraging signs. Its 4Q profit came above expectation.

With Singapore’s Non-Oil Domestic Exports (NODX) contracting 10.1 per cent in January, the deepest fall since October 2016. Export-oriented technology companies – Venture Corp & UMS – were traded in range despite of sharp fall in NODX. This suggests either the market has not digested the news fully, or the worst has already been factored in during last year’s sell-off.

Singapore’s manufacturing PMI has also fallen to 50.7 (earlier this month), moving closer to contractor territory in January due to weakness in the electronics manufacturing sector. Against the backdrop of slower external demand and trade uncertainties, the outlook in electronics export is likely to remain soft in the near future.

Singapore’s Finance Minister Heng Swee Keat unveiled the 2019 Budget, planning a budget deficit by 0.7 percent of GDP. The budget addressed the need of an aging society and committed to upgrade skills in its workforce, while tightening up rules for hiring foreign workers. Around 30 percent of the budget is set aside for defence, security and diplomacy purpose, targeting not only physical attacks but also cyber security. A 50 percent personal income tax rebate with a cap of S$200 was introduced to alleviate burden on lower-income families.

In North Asia, China markets embraced their strongest rally seen this year, with Shanghai Composite gained 2.6% and ChiNext – its catalyst board – soared 4%. Higher-than-expected January credit lending and M2 growth signalled loosening monetary condition, which is a positive push behind stock market rally. Recent US-China trade talk ended with positive note also boosted investment sentiment.



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