Offshore and marine, banks and hospitality sectors to boost overall market earnings

The three select sectors are expected to report higher profits, said DBS Vickers.

Higher earning potentials for offshore and marine, banks and hospitality sectors will boost the overall market earnings, as measured by the STI  to 3300 in the next three months from its recent low of 2920, said the DBS Vickers Securities.

In a research note, DBS Vickers said that while it believes the benchmark index for the Singapore stock market have already bottomed at 2920, downside risks remain due to uncertainties brought by inflation, Middle East unrest, expiry of QE2 and slower growth in China.

Market earnings downgrades however have stabilized according to DBS Vickers as it expects the three select sectors to report higher profits.

DBS Vickers noted that potential earnings upside for the offshore and marine will come from the higher than expected order wins while banks will benefit from increase in business loan volumes. Tourist diversion trend, meanwhile will buoy well for the hospitality industry.

“As we move into the 1Q11 reporting season, the trend of downgrades should have stabilised, with potential upside for selected sectors which should lift overall earnings growth,” said the DBS Vickers.

DBS Vickers expects the year-end FSSTI to cap at 3500.