26th October 2012

Singapore's shares ended the holiday-shortened week moderately higher, shrugging off negative cues from Wall Street as well as any dent in sentiment from the scrapping of the Dynasty REIT IPO.

"The only thing I can put my finger down to is news from yesterday, here in Asia, that the Chinese gauge of manufacturing, the HSBC and MNI, showed slight improvement in manufacturing activities. It gave those sitting on the sidelines a little added confidence to come in," despite poor European data, said Song Seng Wun, head of research at CIMB. "There's really nothing else. The earnings front isn't giving anyone any reason to go either way."

The 30-share Straits Times Index ended Thursday up 12.78 points, or 0.4%, at 3057.51. While the index eked out a 0.3% gain for the week, it remains stuck in recent ranges, unable to break above 3060 resistance. Volume was sleepy at 1.39 billion shares valued at only S$1.01 billion, heavily skewed toward penny plays.

Takeover target Fraser & Neave remained in the spotlight, ending up 0.3% at S$9.23 after TCC Assets extended its S$8.88/share offer for the conglomerate to Nov. 8 from the original Oct. 29 deadline. Volume in the shares was strong, with around S$43 million worth changing hands amid a series of large trades.

Singapore Airlines rose 0.3% to S$10.68, in line with the broader market, not reacting much to its plans to acquire 25 new Airbus aircraft in an order valued at US$7.5 billion and its plans to end non-stop Singapore-Los Angeles and Singapore-New York flights. Credit Suisse doesn't expect the aircraft orders to affect the carrier's finances much near term, but it says the impact of mothballing the non-stop Singapore-U.S. services will be more immediate. "The route cancellation is a tacit admission of the difficult trading that we think will be evident in Singapore Airlines' fiscal-2Q13 numbers on Nov. 2--particularly given its premium market exposure," it said in a note, adding it may raise earnings forecasts after the money-losing service is cancelled.

Hutchison Port Holdings Trust fell 4.3% to S$0.785 after reporting its third-quarter net profit fell 15.1% year-on-year to HK$601.7 million, with results around 13% below HPHT's prospectus projection amid weak U.S. and Europe trade demand. Jefferies downgraded the stock to Hold from Buy after the results missed its forecasts. "Facing tough macro headwinds, low quality volume growth and high capex requirements, we expect HPHT to cut its 2013 dividend by 10% from the 2012 level followed by a 2% cut in 2014. The recent 15% rally on yield-chasing trade is also a bit excessive in our view, without fundamental support," the house said.