Channel NewsAsia

Mixed bag for Singapore corporate earnings in Q2

Analysts say domestically-focused companies will continue to face challenges with loan curbs and rising cost pressures, but they expect the global recovery to help support externally-oriented sectors.

SINGAPORE: Singapore companies turned in a mixed set of results for the second quarter of this year. Among Straits Times Index (STI) heavyweights, on average, it is estimated that for every company that beat expectations, there was another that disappointed.

Banks were among the top performers, with all three local lenders reporting higher-than-expected earnings. On the other hand, the commodities and telecoms sectors largely missed expectations.

Going forward, analysts said the property sector will remain challenged by domestic cooling measures. Mr Terence Wong, head of research at DMG & Partners Research, said: "With the cooling measures, property companies, by and large, will take a few quarters to recover. In fact, if you look at supply coming through, there is going to be a lot of supply, whereas demand has largely crimped. So unless cooling measures get lifted, I think there is still a trying period for property developers."

While local firms continue to grapple with restructuring and cost pressures, market watchers said that externally-oriented sectors are likely to benefit from the improving global outlook.

Mr Daryl Liew, head of portfolio management at Reyl Singapore, said: "Companies which are more geared to the global cyclical recovery will probably do all right. Those that are heavily dependent on domestic spending might struggle a bit because of various measures. So spending in that regard will probably be curtailed. Our preference is investing in Singapore companies leveraged to global growth, rather than Singapore’s growth, because Singapore’s growth is likely to be sluggish moving forward because of all these reasons."

Analysts have highlighted the offshore & marine and construction sectors as possible bright spots in Singapore's economy for the months ahead. 

Tweet photos, videos and updates on this story to  @channelnewsasia