STI down 52 points to 1.56% in August

No thanks to unexciting earnings from O&G and telcos.

The benchmark Straits Times Index (STI) ended August down 52 pts to -1.56%, no thanks to bleak Q2 results and rising geopolitical tensions.

According to OCBC Investment Research, oil and gas (O&G) and telco sectors underperformed on unexciting earnings whilst technology shares outperformed on the back of strong quarterly results.

City Developments and OUL moved higher on a monthly basis, underpinned by the market's improving sentiment.

Rig builders failed to meet positive expectations as Keppel, SembCorp, and SembCorp Marine ended with losses.

Here's more from OCBC:

Our view for the STI to pullback to 3255 in August proved right with the index falling to a low of 3244, which coincided with a 12-month forward PE of 14.02x (+0.25SD).

The STI’s YTD rise has clearly moderated. The index was up 290 pts (+10.2%) in the first four months of the year from January to April but a much tamer 105 pts (+3.3%) over the next four months from May till now.

We expect August choppiness to continue into the month of September for the following reasons (1) uncertainty over central bank’s policy actions (2) risk of escalating geopolitical tensions in the Korean peninsula (3) a lacklustre 2Q results season.

We expect the near-term rebound to be capped around c.3320 with downside risk to c.3210 technical support. Below this, base support is 3100.