Stocks suffer a spate of downgrades after dismal Q2 results

Singapore doesn't look so defensive now.

Analysts trimmed their earnings forecasts for Singapore-listed stocks after most companies turned in sub-par results in the second quarter.

"The Singapore market feels like a Mission Impossible stunt. Analysts [were] hoping for a bottom, only to find another set of results that is below water. Worse, a RMB devaluation spooks outflows, so banks and property turn out to be the hardest hit," said Kenneth Ng, analyst at CIMB.

He said that the current global environment is fragile for risk assets and Singapore’s poor corporate reporting season does little to improve investor sentiment.

A report by DBS analysts Janice Chua, Ling Lee Keng and Yeo Kee Yan warned that corporate earnings could decline this year, with earnings growth for FSSTI companies expected to be at a mere 1%.

"We had adopted a cautious stance and pegged 3150 as the lower band for the STI in our previous strategy, [but] this level has since broken down. Thus, we continue to advocate a cautious stance," they said.

Singapore equities are expected to suffer further on back of weakening ASEAN currencies, the potential US Fed interest rate hike and sluggish external demand.

"All in, data points allude to a difficult environment to deliver topline growth, while susceptibility to provisions is rising and overseas earnings get hit with translation effects, as ASEAN currencies fall," CIMB's Ng said.

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