Market Summary 1st December 2012

Singapore's shares ended higher Friday, turning in gains for nine sessions out of the past ten, as the market shrugged off negative rumblings over negotiations to avert the U.S. fiscal cliff.

Republicans on Thursday rejected President Obama's opening budget-talk bid and House Speaker Boehner said he was "disappointed" with the lack of progress. "The market is prepping for an amicable resolution and attributing the comments from the Republicans as just that. It's not translating into any (market) reaction," said Liu Jinshu, deputy lead analyst at SIAS Research. "The positive is that they've started to talk. It's different from August 2011. This time around, the White House is taking the initiative. If the Republicans reject the package, the blame will be on them," he said. But in a note, Maybank warned "the mood of the crowd can turn on a dime, and we think it best to resort to watching the charts and headlines closer in the short term."

The 30-share Straits Times Index ended up 24.05 points, or 0.8%, at 3069.95, its highest close since Oct. 8. The index tacked on 2.7% for the week. Volume was strong at 2.32 billion shares valued at S$2.36 billion, indicating market players are refocusing on blue-chips after their recent infatuation with penny plays.

But Yeo Kee Yan, market strategist at DBS Vickers, said the gains might not last. "I don't see the index continuing to rise next week. At best sideways, or giving back some of this week's gain," he said. He added that gains will likely be capped until there's a resolution to the fiscal cliff, and said the index's near-term resistance around 3090-3100 was very close. He also expects the traditional year-end lull period to put a damper on gains, with shares picking up again only around the Christmas period.

Olam tacked on 1.0% to S$1.575, extending Thursday's 4.0% rise in strong volume. An analyst said insider buying by the CEO and two directors are "a strong show of support," while there was nothing new in short seller Muddy Waters' latest salvo against the company. Muddy Waters issued an eight-page response to Olam's 45-page rebuttal of the short seller's 133-page report accusing the commodities trader of a litany of failures, ranging from incompetence to malfeasance; Olam called the allegations "false and misleading" and has filed suit in Singapore on allegation of libel and slander.

Among other commodity plays, Golden Agri ended down 0.8% at S$0.66, erasing some of Thursday's 4.7% rise in strong volume accounting for 6.6% of shares changing hands on the SGX.

CapitaLand rose 0.9% to S$3.53. Citigroup said the company's S$505 million bid for a Bishan residential site adjacent to its current Sky Habitat project was a defensive move to prevent competing developers from under-cutting its price.

Genting Singapore advanced 2.4% to S$1.28 in strong volume, with large trade sizes suggesting institutional interest. "Some people believe that we're at the bottom of the earnings cycle for gaming around the region," an analyst said, adding another potential reason for the rise is "you've got pending political change in Japan. So people obviously get hopeful about potential legalization of casinos."

Market Summary at 17th November 2012

Singapore shares ended flat on Friday, surrendering gains in the closing minutes of trading after rising on bargain hunting.

Shares started weaker in early trading, after the government reported Singapore's gross domestic product contracted 5.9% in the July-September period from the previous quarter on seasonally adjusted, annualized terms, sharper than an October estimate of a 1.5% contraction. Although the Straits Times Index rose to an intraday high of 2,954.42 as investors sought bargains, the benchmark index ended 0.01%, or 0.29 point, lower at 2,945.63. Volume fell to 1.48 billion shares from 2.66 billion on Thursday, and gainers outnumbered losers 209 to 183.

The benchmark ended the week 2.1% lower.

However, some analysts said the Singapore stock market has likely bottomed. "Obviously, markets rightfully fear a number of crash-inducing events now, including the U.S. fiscal cliff, a euro-zone breakup, and a China hard-landing," CIMB said in a note. However, "markets have a habit of proving its worst fears, or its worst hopes, unfounded though. The fact that all these are expected means that it is unlikely to happen; if anything were to trigger a major crash, it has to be something not expected now." Several economists say they expect U.S. politicians to reach a deal by the end of the year to avoid sharp tax increases and spending cuts, popularly known as 'fiscal cliff.'

Fraser & Neave was the top performer, gaining 1.6% to close at 9.28 Singapore dollars (US$7.58) as rival Thai and Indonesian tycoons battled for the beer-to-real estate conglomerate. Thai billionaire Charoen Sirivadhanabhakdi's TCC Assets, which has submitted a bid for Fraser & Neave, is considering all options--including raising its offer--after Overseas Union Enterprise, controlled by Indonesia's Riady family, made a counter offer for the company Thursday, according to people with knowledge of the deal.

Stocks of several other companies that had been battered earlier this week clawed back. Wilmar International added 1.3% to close at S$3.16 after losing 1.6% earlier in the week and Noble Group gained 1% to close at S$1.06. However, Golden Agri-Resources closed 2.4% lower at S$0.60, as investors buying the stock now won't be eligible for dividend payment.

Global Logistic Properties was the biggest decliner among benchmark shares, shedding 2.7% to S$2.52 amid signs of economic trouble in Japan and China, which are its main markets.

10th November 2012

Singapore shares were flat Friday as encouraging economic data from China buoyed market sentiment, balancing worries about the looming U.S. deadline for striking a tax deal.

Chinese industrial production rose 9.6% in October from a year earlier, beating market forecasts and picking up pace from the previous month. The improvement in manufacturing "adds more fuel to the bottoming-out argument," said Justin Harper, a market strategist at IG Markets. Meanwhile, inflation in China moderated in October, showing that the government has room to further stimulate the economy if necessary. "This has caused stimulus junkies to start salivating at the prospect of more policy easing from the PBOC," said Mr. Harper.

But worries about the U.S. fiscal cliff weighed on Asian equities markets generally. Still, Singapore's 30-share Straits Times Index shed only 0.1%, less than regional counterparts like Hong Kong's Hang Seng Index, which was down 0.9% Friday, and Korea's Kospi, which lost 0.5%.

The STI ended 2.69 points lower at 3009.56. Psychological support at the 3000 level might have curtailed the STI's losses, as trade was "directionless" for most of the day, said SIAS Research analyst Ng Kian Teck. Volumes were lower with 1.27 billion shares changing hands compared with 1.72 billion Thursday. In the broader market, losers outnumbered gainers 263 to 135.

Noble Group plunged 7.8% to close at S$1.175, making it the biggest decliner among the STI components after its third-quarter earnings disappointed investors. UOB KayHian cut the commodity supply-chain company to a sell rating from buy, citing a weaker-than-expected performance in the agriculture and energy businesses, even though the company posted a net profit of US$75 million overall.

Wilmar climbed 1.6% to end at S$3.17, after reporting a 26% rise in third-quarter income.

OCBC crept 0.2% higher to end at S$9.10 as its third-quarter results, including a nearly fourfold increase in net operating profit, were in line with what the market was expecting.

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.

20th October 2012

Singapore shares ended lower Friday, weighed by disappointing quarterly earnings reports in the U.S. and among Singapore companies.

Poor third-quarter earnings results from Google dragged U.S. stocks overnight and the downbeat mood appears to have spilled over into Asian and European markets. "I think the guidance is still looking a bit cautious," said Carey Wong, an analyst at OCBC. "That's why the market isn't really going anywhere." But signs of improvement in China's economy that emerged this week may buttress investor sentiment and support Singapore shares in future sessions, he added.

The 30-share Straits Times Index declined 11.44 points, or 0.4%, at 3048.92. Volumes were up with 1.8 billion shares changing hands, up from Thursday's 1.4 billion.

Lackluster earnings reports from some STI component companies also dented share prices. Singapore Exchange slid 0.7% to close at S$6.80 after reporting net profit fell 15% in the quarter ended September 30, on lower trading volumes.

Offshore rig-builder Keppel Corp. fell 0.9% to close at S$11.29, after it reported third-quarter profit fell 14.7% on-year. "While the company has been guiding for margins to come down for some time, we're seeing this play out," said Vincent Fernando, an analyst at Religare Capital, who kept the stock at Buy, but lowered his target price to S$12.80 from S$13.90. Another rig-builder, Sembcorp Marine Ltd., was the biggest decliner among STI components, falling 1.6% to close at S$4.86.

Bucking the general selling trend was Fraser & Neave Ltd., up 4.0% to close at S$9.29, after property firm Overseas Union Enterprise Ltd. said it is in talks to make an offer for the conglomerate. OUE's advance buoyed F&N shares as investors reckoned that the emergence of a new suitor would lead Thai billionaire Charoen Sirivadhanabhakdi to increase his S$7.2 billion bid.

F&N was the second-most active share by value traded, with S$105.6 million shares changing hands. It was eclipsed only by Indonesian coal play Geo Energy, which saw volumes of S$149.9 million in shares traded, and advanced 34% from its IPO price of S$0.325 to close at S$0.435.

Market Summary 13 Oct 2012

Singapore shares ended higher, tracking gains in some regional markets while the central bank's decision to keep its currency policy unchanged assured investors about the Singapore dollar's safe-haven status. However, traders and analysts said market participants could turn cautious in the coming weeks as the third-quarter earnings season kicks in.

The benchmark 30-component STI ended 0.3%, or 9.09 points, higher at 3041.75 points, with a total of 1.44 billion shares changing hands, up from 1.24 billion Thursday. The index ended 2.1% lower on the week.

"Capital flows into the Singapore dollar may continue as the SGD remains one of the safe-haven currencies in this world amidst the current uncertainties," UOB Economic-Treasury Research said in a note.

Earlier in the day, the Monetary Authority of Singapore unexpectedly kept its monetary policy unchanged and said it will continue to guide the local currency on its current appreciation path, as inflation concerns trumped a contraction in the economy in the third quarter.

Phillip Securities in a note said any gains in the Singapore stock market would be limited in the near term, adding that investors should take a "nimble" trading stance in the short term. "Over the next couple of weeks of corporate reporting season, forward earnings guidance as well as the economic outlook will prance to the forefront of investors' minds and dictate market direction," it said.

Shares were mostly mixed, with commodities stocks leading the gains. Wilmar International finished the day 3.6% higher at 3.17 Singapore dollars (US$2.58), as news that Malaysia is set to cut its export duty structure lifted investors' sentiment. "It's one of the better companies in terms of having feet in both Indonesia and Malaysia and (being) able to trade around any opportunities from" the potential tax change, an analyst said. Commodities companies Olam International gained 1.8% to S$1.95 and Golden Agri Resources rose 1.6% to S$0.645.

Fraser & Neave, which is currently the takeover target of Thai billionaire Charoen Sirivadhanabhakdi's TCC Assets, ended flat at S$8.89 after trading in positive territory for most of the day. Investors said they hope Mr. Charoen would raise his offer price of S$8.88 a share for the company.

Shares of DBS Group Holdings were up 0.3% at S$14.18, as the bank said after the market closed Thursday that it sold a 10.4% stake in Bank of the Philippines Islands to Ayala Corp. for US$616.4 million to boost capital before Basel III rules kick in next year.

The Singapore government's move last week to tighten the property market weighed on developers. CapitaLand was down 0.6% at S$3.16, while City Development lost 0.4% to S$11.52.

In the broader market, gainers dwarfed decliners 214 to 166.

6 October 2012

Singapore shares rose to a 14-month high tracking a regional rally Friday as investors cheered upbeat U.S. economic data and reassurances by the European Central Bank chief to support troubled euro-zone economies.

Underpinning the rally were better-than-expected weekly jobless claims and factory-order data in the U.S. as well as ECB President Mario Draghi's affirmation Thursday of the central bank's plan to purchase bonds from European states that request assistance.

The 30-share Straits Times Index ended 0.7%, or 21.23 points, higher at 3,107.87--its highest closing level since Aug. 3, 2011. For the week, the index closed up 1.6%.

However, while Thursday's U.S. jobless-claims data may have boosted expectations slightly, "much hope rests on tonight's lottery of the U.S. employment report," UOB Economic-Treasury Research said in a note. "The risk here is for a marginal beat to disappoint." "So here we sit again with the chance that risk assets could be boosted whichever way the number prints," as a weak reading might be seen as a precursor to more stimulus steps by the U.S. Federal Reserve, Jason Hughes, head of premium client management at IG Markets Singapore, said. "Cynics out there might be right in assessing that this non-farm number doesn't really matter all that much then."

Some cautiousness ahead of the U.S. jobs data due later in the global day helped drag trading volume down to 1.35 billion shares from 1.6 billion shares traded Thursday.

Gainers outnumbered decliners 277 to 163. Although only 14 of its 30 components ended higher, the STI held on to gains supported by strong performance by Jardine-linked heavyweights. Jardine Cycle & Carriage, the index's best performer, surged 6.9% to S$53.26, as analysts flagged an upbeat outlook for its 50.1%-owned Indonesian automotive unit, Astra. Credit Suisse expects Indonesia to pass low-cost green car regulations in the next six months, and Astra expects to launch its models by the second half of 2013, while its competitors are tipped to launch only at the end of 2013.

Palm oil company Golden Agri-Resources snapped a three-day losing streak, rising 2.4% to S$0.645 as crude palm oil prices recovered from recent sharp drops.

Some property stocks also gave the benchmark index a lift. CapitaLand and rival City Developments both extended recent gains, with CapitaLand ending 0.3% higher at S$3.30 and City Developments adding 0.2% to close at S$11.95. Hongkong Land rose 0.8% to end at US$6.08.