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Singapore market eyes technology shares

SINGAPORE: Technology-related issues are likely to remain the focus of Singapore investors this week but interest in the broader market may be subdued as fears of another rate hike in the U.S. weigh on sentiment, analysts said.

"If Wall Street is going nowhere, Singapore market will be shut in the box," said Marco Wong, chief investment officer of SG Asset Management.

The Straits Times Index eased one percent to 2,234.92 on the week as Wall Street was struck by fears of another round of rate hikes in March. Sharp losses in U.S. markets on Friday were expected to pressure local shares on Monday morning.

But analysts said electronics-related issues would remain in focus although some analysts looked for some consolidation in the sector .ELCT, which has risen almost 30 percent for the year, compared with a 10 percent fall in the STI.

"It will remain in focus, but I don't think they would really move very much from current levels," said Pranab Kumar Sarmah, an investment analyst with Daiwa Institute of Research.

"It would probably consolidate while waiting for their results to come out," he added. Sarmah kept an overweight rating for contract manufacturers, system integrators and semiconductors.

SG's Wong said contract manufacturers like Venture Manufacturing VENM and NatSteel Electronics NASL remained his favourite counters.

"At the moment, we are overweight in outsourcing manufacturers.otherwise I don't see clear direction for the Singapore market," he said.

Singapore Telecom TELE would also be in the limelight afer its possible merger with Cable & Wireless HKTwas thrown into question late last week.

British parent Cable & Wireless Plc said on Friday that Pacific Century CyberWorks 1186 had told it it planned to propose a merger with its Hong Kong unit.

PCCW is a unit of Pacific Century Regional Development's PCEN.

Cable & Wireless HKT said late on Saturday that its financial advisers had discussed the proposal with PCCW's advisers but said PCCW had made no firm offer. It said it was continuing talks with its parent and SingTel.

On Singapore banks, Wong said: "I'm not very excited. They are at fair value. After last year's strong performance, they had came down a lot from the high, but from the low, they had also rebounded a lot."

"We will wait to see how they perform...loan growth is still sluggish," Wong said, adding that some banks' previous earnings were only one-off.

By Friday's close, Singapore's finance sector index .FIAN, which also includes finance firms but gives a good reflection of banks' shares, had lost 12 percent of its value since a record high on January 3.

But the index has more than doubled in value, compared with last year's low, in February.

In the semiconductor sector, Chartered Semiconductor Manufacturing CSMF and ST Assembly Test Services STTS were expensive compared to Taiwan and South Korean companies, Wong said.

The Dow Jones Industrial average fell 218.42 points or 2.05 percent on Friday, to end at 10,425.21.

The 30-stock average, one of the world's most-widely watched, is now in a "correction zone" as defined by Wall Street analysts, down 11.07 percent from its January 14 closing high of 11,722.98.

The Nasdaq Composite Index, heavily weighted with technology stocks, fell 90.18 points, or 2.01 percent, to 4,395.45, a day after it scored a new high of 4,485.63.-Reuters