Expect some losses today.

The Straits Times Index (STI) ended 13.07 points or 0.43% higher to 3064.85 on Monday, taking the year-to-date performance to +6.32%.

The top active stocks today were DBS, which gained 0.74%, CapitaLand, which gained 2.14%, Singtel, which gained 0.52%, Keppel Corp, which declined 1.88% and UOB, with a 0.10% advance.

According to OCBC Investment Research, stocks dropped to close lower with the Dow logging its worst daily loss since mid-October as investors grappled with the latest policy decisions by President Donald Trump. Wall Street also looked ahead to a heavy week of economic data, corporate earnings and the latest meeting by the Federal Reserve set to begin Tuesday.

Meanwhile, nine out of eleven S&P 500 industries ended lower, with Energy (-1.76%) leading the losses while Consumer Staples (0.06%) led the gains.

"The retreat on Wall Street overnight is likely to spook the local market to a poor start this morning and sending the STI back towards 3000," OCBC said.

Here's more from OCBC:

As before, we peg the initial hurdle at 3065, ahead of 3100. On the flip side, we peg the immediate support at 3000, ahead of 2940.

Overall volume shrank 62.9% with 0.9b units traded, and total value dipped 53.8% to S$0.6b, while average value/unit added 24.6% to S$0.66. 

Price index decreased by 0.5% in 4Q16.

According to the latest figures from URA, prices of landed properties rose by 0.8%, compared with the 2.7% decline in the previous quarter. Prices of non-landed properties decreased by 0.8%, compared with the 1.2% decline in the previous quarter. For the whole of 2016, prices of landed properties decreased by 4.5% while prices of non-landed properties fell by 2.6%.

"Prices of non-landed properties in Core Central Region (CCR) increased by 0.1%, compared with the 1.9% decrease in the previous quarter. Prices of non-landed properties in Rest of Central Region (RCR) and Outside Central Region (OCR) decreased by 2.0% and 0.6% respectively, compared with the 1.0% decrease in RCR and 1.0% decrease in OCR in the previous quarter. For the whole of 2016, prices in CCR, RCR and OCR declined by 1.2%, 2.8% and 3.4% respectively," URA said.

Rentals of private residential properties fell 1.0%, compared with the 1.2% decline in the previous quarter. For the whole of 2016, rentals of private residential properties fell 4.0%, compared with the 4.6% decline in 2015.

And here's how to visit Japan and Singapore for less than $750 round-trip.

Buying pork keeps getting pricier in Singapore. While the overall cost of living stopped falling in the city-state, the average prices of traditional caramelized barbecue pork have climbed the most in at least four years in the weeks leading up to the Lunar New Year. The food item, commonly known as bak-kwa, is a popular gift and snack for the season in Singapore and Malaysia. Read more here.

It has been an optimistic start to 2017 in Singapore, as recent estimates from the Ministry of Trade and Industry reveal that the city state has sidestepped a technical recession, posting 1.8% growth in GDP for 4Q2016, and an overall growth rate of 1.8% for the year. While this is gratifying news, we still face a subdued economic outlook both globally and domestically. In Singapore’s real estate sector, the combination of slower employment, earnings and population growth is impacting housing demand. Add to that expectations of rising interest rates — thanks to likely hikes by the US Federal Reserve — and the overall sentiment is fairly gloomy. Thus, house prices in Singapore are under considerable downward pressure. With this in mind, the residential real estate market is likely to remain stagnant, with cooling measures still in place alongside ongoing slow economic growth. Read more here.

Still trying to decide where to go in 2017? We have an idea. For as little as $747 round-trip, travelers can visit Singapore and Japan anytime between now and May, or from August until early December. By extending your layover in Tokyo, travelers can see two cities for the still very low price of a round-trip fare to one. For more information on how to book, check out The Flight Deals detailed directions. Travelers will need to use ITA Software Matrix Airfare Search to locate the lowest fares, and use an advanced routing code to find connections greater than 48 hours. Read more here.

The office sector recorded the highest investment gains.

The past year had been a good year for investment sales in Singapore, rising 49.6% QoQ to a tally of $7.83b in 4Q16.

According to CBRE Research, the growth is bigger in terms of annual investment sales. For 2016, investment sales soared 28% to $23b.

"The stellar performance delivered in 2016 was a result of key deals in the office and residential sectors where a significant inflow of capital came from foreign investors," CBRE said.

Inbound investment volume in the city-state surged 64.9% YoY to a tally of $9b for the whole year. This was the highest since the last high in 2007 when $15.3b was recorded.

Of all the sectors, the office clocked its highest year of investment sales since 2010. Office investment sales amounted to $10.1b, equivalent to 43.8% of total investment sales. This reflected a surge of 138.8% YoY.  

The sector will slow down to a 1.5% growth.

The strong gains in the manufacturing sector reflected in December would not likely to linger this year, analysts from RHB reckoned.

The research house noted that the manufacturing activity is set to slow down starting this year, undermined by softer smartphone and personal computer demand.

"We maintain our projection for the manufacturing sector to grow 1.5% this year, decelerating from +2.3% in 2016," RHB said.

To recall, Singapore's manufacturing output in December surged 21.3%, led by strong gains in the heavily-weighted semiconductors and pharmaceutical sectors. 

It ranked 6th in the 2017 Bloomberg Innovation Index.

The city-state is the 6th most innovative economy in the world and the second in Asia.

According to the 2017 Bloomberg Innovation Index, Singapore managed to grab Japan's spot as the second most innovative economy after the latter fell from 4th to 7th spot.

South Korea remained the big winner, topping the international charts in R&D intensity, value-added manufacturing and patent activity and with top-five rankings in high-tech density, higher education and researcher concentration. Scant progress in improving its productivity score — now No. 32 in the world — helps explain why South Korea’s lead narrowed in the past year.

Read more here.

Landlords and retailers are off to another bumpy ride.

The retail outlook for this year seemed to still be on the cloudy side for both retailers and landlords.

According to Knight Frank's latest Singapore Retail Bulletin, average rents in the Central Region are envisaged to fall by 5.0% to 8.0% by Q4 2017, while the more resilient prime rents to moderate downwards by up to 3.0% YoY in the same period.

"Landlords are likely to take on a more proactive role to initiate more advertisement and promotion activities in a bid to attract shoppers into the mall. On the same note, retailers are also expected to explore innovative concepts that integrate both offline and online retailing platforms to enhance consumer engagement," the research house said.

Meanwhile, the occupancy performance is expected to hover between 90% and 92% this year, after maintaining an average of 92.2% over the first three-quarters in 2016. This is in consideration of the close to 2m sq ft. gross floor area of retail space slated for completion in 2017 amidst the heightened level of caution among retailers towards their business strategies due to the uncertain global economic outlook.
 

Compared to a 0.6% decline in the past quarter.

Prices of retail spaces in Singapore saw a 0.2% increase in 4Q16, following a 0.6% decrease in the past quarter.

According to the latest figures from Urban Redevelopment Authority, rentals of retail space decreased by 1.2% in 4Q16, compared with the decrease of 1.5% in the previous quarter.

For the whole of 2016, prices and rentals of retail space fell by 5.4% and 8.3% respectively, compared with the 0.8% and 4.1% decline in 2015.

Meanwhile, as at the end of the said quarter, there was a total supply of 595,000 sqm GFA of retail space from projects in the pipeline, compared with the 652,000 sqm GFA of retail space in the pipeline in the previous quarter.

URA also noted that the amount of occupied retail space increased by 66,000 sqm, compared with the decrease of 26,000 sqm, in the previous quarter. The stock of retail space increased by 10,000 sqm in 4Q16, compared to the increase of 17,000 sqm in 3Q16.

This resulted in the 7.5% drop in the island-wide vacancy rate, in contrast to 8.4% in the previous quarter. 

Home prices are set to make a comeback after a three-year losing streak.

According to a report from Bloomberg, amidst a restructuring push to boost a slowing economy, the government could signal its intention to reconsider property cooling measures as early as the budget speech in February, Carmen Lee, head of research at Oversea-Chinese Banking Corp. said in an interview. That promises to boost the city-state’s largest developer stocks, including City Developments Ltd., which is one of the top picks for OCBC’s Lee and analysts at CIMB Research Pte, Credit Suisse Group AG. Other potential winners include CapitaLand Ltd., UOL Group Ltd. and OUE Ltd.

“Between buying physical property and buying stocks, stocks offer you the liquidity and they are pricing in all the negatives,” Lee said. “They may not outperform in the next one to two quarters but if you ride this out for 18 months or so, you will see better upside.”

Home prices in Singapore have been driven by the city-state’s policies in recent years as the government vowed to rein in soaring values in one of Asia’s most expensive housing markets. Fourth-quarter private home prices fell 0.5 percent versus the last quarter, when housing values dropped by the most in seven years, according to data released by the Urban Redevelopment Authority on Thursday.

Read more here.

This is a big improvement from 1.6% decline in the previous year.

Despite the slowing economy, HDB resale prices have not been affected as much as their private residential counterparts. In the past year, resale price index decreased by a very slight 0.1%.

According to ERA Real Estate key executive officer Eugene Lim, a major reason is the difference in characteristics between HDB resale buyers and private residential property buyers.

"As a no frills housing unit, HDB flats satisfy a housing need, whereas private condominiums are more of a housing want, with their higher prices and more luxurious facilities. Hence, HDB prices tend to be less correlated to Singapore’s economic performance," Lim argued.

Lim also pointed out that another factor which contributed to the stability of the HDB resale market was the decision of HDB to publish daily transaction details online, available for public access.

"As this initiative by HDB has been ongoing for some time, we have seen more widespread usage of this information. Negotiations are usually centred around recently transacted prices, and ultimately, the deal will be concluded at a price which does not differ too much from past prices. This is because the buyer wants to ensure that the purchase price can be supported by valuation," Lim explained.

Capex could rise to as high as $170m.

As the competition is expected to heat up in the telco scene with the arrival of TPG, M1 is expected to incur higher capex as it invests in new technologies.

According to Maybank KimEng, M1's capex is expected to soar by another 21% to $170m this year. It noted that this may be attributable as M1 firms up additional investments in new technologies, such as 4.5G/5G, HetNet, and NarrowBand IoT.

"Earnings will be diluted until they can achieve scale," Maybank noted.

Meanwhile, the brokerage firm noted that M1's net profit fell below the already lowered expectations. Postpaid revenue continued to weaken due to lower roaming, and IDD usage as the OTT switch deepened.

Data usage recorded a strong rise, but it barely made a visible impact on revenue or margins.  

Blame it on the divestment of 77 King Street in Sydney.

The past year had been difficult for Keppel REIT as it posted a 9.6% decline in net property income to $31.4m in 4Q16. This came as its property income declined to $40m, down from $42.8m.

"2016 was a difficult year for the Singapore office market given the oncoming supply of office space and aggressive leasing efforts from newly completed buildings. In navigating the challenging environment, the Manager continued its proactive approach to renew and forward renew leases to retain tenants and mitigate leasing risk," the group said.

For the whole year, Keppel REIT achieved a distributable income of $208.1m, which included one-off income of approximately $10m. This was lower compared to the $217.3m recorded a year earlier. The group said this is due mainly to the absence of the contribution from 77 King Street in Sydney, which was divested in 1Q 2016, and lower contribution from Bugis Junction Towers. Property income and net property income for FY 2016 also declined correspondingly by 5.3% and 6.6% YoY respectively.

"The Manager is declaring a DPU of 1.48 cents for 4Q 2016. There is no distribution of other gains for this quarter. This brings total DPU to 6.37 cents for 2016, and translates to a yield of 6.2%, based on the market closing price per unit of $1.02 as at 31 December 2016," Keppel REIT said.

Looking ahead, Keppel REIT expects the challenging global economic environment to have a continued dampening effect on the Singapore office leasing market especially this year.

"While Keppel REIT’s portfolio of quality assets and its high committed occupancy as at end-2016 will help the REIT weather the supply and demand imbalance in the office sector, Keppel REIT’s rental income is not immune to the general decline in rents in the Singapore office market," the group said.

It added, "On the capital management front, the rising interest rate environment will see borrowing costs gradually increase as the US Federal Reserve seeks rate normalisation in the longer term. At its December 2016 meeting, interest rates were raised by 25 basis points, with more rate hikes anticipated in 2017. To manage volatility in interest rates, the Manager continued its prudent approach, with fixed-rate loans at 75% of total borrowings as at end-2016." 

Thanks to higher master lease income and lower property expenses.

OUE Hospitality Trust, a stapled group comprising OUE Hospitality Real Estate Investment Trust (OUE H-REIT) and OUE Hospitality Business Trust (OUE H-BT), registered a 2.5% increase in net property income for 4Q16 to $29.6m. This came as its revenue rose 0.7% to $33.2m.

According to the group, the higher revenue is attributable to the higher contribution from the enlarged 563-room Crowne Plaza Changi Airport (CPCA) as the 243-room extension to CPCA was acquired in August last year. On the other hand, the improvement in net property income was due to higher master lease income from the hospitality segment and lower property expenses recorded for the retail segment.

Meanwhile, it achieved a distributable income of $24m for the said period, up 5.3% last year. OUE Hospitality REIT Management CEO Chong Kee Hiong said this is the result of higher income from the hospitality segment, partially offset by lower contribution from the retail segment.

“The higher income from the hospitality segment is attributable to additional income from the enlarged CPCA as OUE H-Trust completed the acquisition of its 243-room extension on 1 August 2016. Master lease income from Mandarin Orchard Singapore (MOS) was lower as corporate demand remained weak, resulting in lower RevPAR of $220 in 4Q2016 compared to $236 in 4Q2015. Though room sales were down, food & beverage (F&B) sales was a bright spot for MOS as the hotel’s F&B outlets enjoyed higher patronage during the period,” Chong said.

The bank's NIM could widen by 1.78% this year.

Singapore banking giant UOB is set to yield from the expected widening of net interest margins (NIM) this year, according to RHB Research.

The firm said this would come as the Singapore Interbank Offered Rate (SIBOR) rises in tandem with the US federal funds rate.

"The 3-month SIBOR has risen to 0.96% (end-Sep 2016: 0.87%). A rising SIBOR ought to raise lending yields, particularly for floating rate loans – such loans account for >80% of UOB's loan book. The increase in the cost of funds is more muted, as SGD fixed deposits account for only half of total SGD deposits," RHB said.

However, the research house argued that the widening NIM would only be partially felt in 2017, as the rise in the US federal funds rate is throughout the year.

"Hence, we have assumed UOB’s 2017 NIM at 1.78%, which is slightly wider than our 2016 estimate of 1.71%. This is to widen further to 1.81% in 2018, in our view," RHB argued. 

Prices eased up from the 1.5% decline in Q3.

Prices of private residential properties declined by 0.5% in 4Q16, an improvement from the 1.5% decline in the previous quarter.

According to the Urban Redevelopment Authority, prices for the whole of 2016 fell 3.1% compared with the 3.7% decline in 2015.

Prices of landed properties rose by 0.8%, compared with the 2.7% decline in the previous quarter. Prices of non-landed properties decreased by 0.8%, compared with the 1.2% decline in the previous quarter. For the whole of 2016, prices of landed properties decreased by 4.5% while prices of non-landed properties fell by 2.6%.

Prices of non-landed properties in Core Central Region (CCR) increased by 0.1%, compared with the 1.9% decrease in the previous quarter. Prices of non-landed properties in Rest of Central Region (RCR) and Outside Central Region (OCR) decreased by 2.0% and 0.6% respectively, compared with the 1.0% decrease in RCR and 1.0% decrease in OCR in the previous quarter. For the whole of 2016, prices in CCR, RCR and OCR declined by 1.2%, 2.8% and 3.4% respectively.

Meanwhile, developers launched 2,944 uncompleted private residential units (excluding ECs) for sale in 4Q16, compared with 1,609 units in the previous quarter. For the whole of 2016, developers launched 7,877 units, compared with 7,056 units in 2015.

Developers sold 2,316 private residential units (excluding ECs) in 4Q16, compared with the 1,981 units sold in the previous quarter. For the whole of 2016, developers sold 7,972 units, compared with 7,440 units in 2015.

It is now the 7th most expensive in Asia.

Singapore is now the 7th most expensive location in Asia for high-end rental accommodation this year, falling from 4th position in the regional rankings last year.

This is according to the latest Accommodation Survey published by ECA International.

Rents for an unfurnished three-bedroom apartment across popular expatriate neighbourhoods in Singapore average US$4,535 per month. Although, since 2012, average rents in Singapore have significantly decreased.

“Property prices rise and fall based on the laws of supply and demand. When demand decreases, prices will fall. When the number of available properties increases, prices also usually drop. Both factors have significantly influenced rental prices in Singapore over the past five years,” said Lee Quane, regional director, Asia - ECA International.

“There have been several contributing factors at play here. Firstly, expatriate numbers in Singapore have stabilised recently, which has curbed demand for rental property in popular expatriate neighbourhoods. Furthermore, improved transport links in Singapore have led to a movement away from historically popular districts such as 9-11 to cheaper locations. Singapore has also received more assignees from places such as China, Malaysia, Taiwan and Thailand whose housing budgets are likely to be lower. These factors, combined with an increased supply of property in the market, have caused landlords to respond by reducing rental prices,” said Quane. 

But expect a boost today.

The Straits Times Index (STI) ended 2.01 points or 0.07% lower to 3039.94 on Wednesday, taking the year-to-date performance to +5.45%.

The top active stocks today were DBS, which gained 1.02%, Singtel, which gained 0.52%, OCBC Bank, which declined 0.43%, Global Logistic, which closed unchanged and UOB, with a 0.14% advance.

According to OCBC Investment Research, this came as the Dow Jones Industrial Average on Wednesday both crossed and closed above the 20,000 level for the first time, while the S&P 500 and Nasdaq Composite also cruised to records after upbeat earnings releases from heavyweights such as Boeing Co. and optimism over the economy.

Meanwhile, eight out of eleven S&P 500 industries ended higher, with Financials (1.65%) leading the gains while Real Estate (-0.61%) led the declines.

"The continued rally on Wall Street overnight could provide a modest boost to the local bourse today," OCBC said.

Here's more from OCBC:

As a recap, the STI failed to hold its ground and sustain itself above 3040 yesterday. But with today’s tone generally supportive, we could see the index make another attempt to overcome it and heading towards the 3065 initial hurdle.

On the downside, we keep the immediate support level at 3000, ahead of the subsequent base at 2940.

Overall volume tumbled 17.5% with 1.9b units traded, while total value was relatively unchanged with S$1.3b traded, and average value/unit gained 21.2% to S$0.69.