THE Straits Times Index (STI) on Thursday drifted to a 6.89 point loss at 2,884.69 in low volume of 977 million units worth S$1 billion. Excluding warrants, there were 163 rises versus 222 falls. The 30 STI components contributed S$738 million or 74 per cent of total dollar turnover.

In short, it was a session devoid of redeeming features, pretty much in line with the dozens that preceded it this year. Part of the reason for the listlessness was that Wall Street on Thursday is closed for Thanksgiving while adding to the quietness was weakness in Hong Kong and China.

All three banks closed weaker, though OCBC stood out with an S$0.08 loss to S$8.72 that came with a high volume of 14.8 million. Trading in OCBC alone was worth S$129.4 million or almost 13 per cent of the whole market' s business.

Nomura in its Nov 26Singapore Banks report said that it thinks that 2016 should see investors' focus on Singapore banks shift to growth from asset quality as non-performing loans peak. " We expect loan growth to be modest at 5 per cent year-on-year but we think earnings could grow at 12 per cent year-on-year because of higher interest rates," said Nomura.

 

" We believe concerns over the Singapore banks' exposure to China and commodity are overblown. The last few quarters have shown that the risk is manageable, and the credit costs are not very material . . . We like the Singapore banks because they have attractive valuations, a 3.5 per cent dividend yield and we estimate earnings growth of 12 per cent in 2016." Its target prices for DBS, UOB and OCBC are S$22.60, S$27 and S$12 respectively.

Elsewhere, Catalist welcomed its 100th listing, Trendlines Group, an Israeli company that creates, develops and invests in medical and agricultural technology companies, with the aim of eventual exit from these investments. The counter underwent a disappointing debut - it was offered at S$0.33 but ended at S$0.30 on volume of 26.6 million.

UBS Investment Research (UBSIR) in its Nov 24Singapore Market Strategy: Outlook 2016 said that it expects gross domestic product (GDP) growth to remain weak at 1.5 per cent in 2016 and 2017 that the US Federal Reserve will raise interest rates by 1.25-1.5 per cent by the end of 2016 and a further reduction in the Singapore dollar' s policy band in April.

" The Singapore market' s implied long-term growth has revisited negative since October 2015. The banking, capital goods and property development sectors are currently trading below their long-term averages," said UBSIR.

" Consensus expects 8 per cent net profit growth for MSCI Singapore stocks. We think this is too optimistic and expect market earnings estimates to continue to be revised downwards in the first half . . . We set a 2016 target of 3,100 for the STI . . . Given tepid prospects for organic growth, we believe companies with strong record in M& A, or which can unlock value through asset divestment for example, will continue to fare well."

US magazine Barron' s said that JP Morgan is forecasting a positive year for US equities. " We expect the S& P 500 Index to transition from a volatile consolidation pattern to an extension of the longer-term rally in 2016." said JPM' s head of global fixed income and US equity technical strategy Jason Hunter.

" Our forecast for higher inflation expectations would likely lead to the rates markets repricing to a more aggressive Fed Funds rate trajectory. The shift to higher rates and a steeper yield curve can help keep equity indices contained into the early months of 2016. Bigger picture, that adjustment process should coincide with the completion of the forecasted consolidation pattern and allow the S& P 500 Index to release higher thereafter."