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.

29 September 2012

Shares in Singapore closed little changed on Friday, giving up gains from earlier in the day as investors remained jittery about the sovereign debt crisis in Europe and didn't want to take fresh positions going into the weekend.

The 30-share Straits Times Index closed 0.91 points, or 0.03%, higher at 3,060.34 after touching as high as 3,073.08. The benchmark slipped into the red briefly. The STI finished the week with a 0.6% loss as enthusiasm about central banks injecting life into the world economy waned and concerns about some European nations' ability to push bitter reform measures came back to haunt markets.

Volumes were lower at 1.57 billion compared with 2.07 billion on Thursday and gainers edged out decliners 230 to 209.

"It is still too early to tell if this is but a minor relief rally in a larger down-move, or if the decline is indeed over and markets are reverting back to risk-on again," Maybank analysts said in a note. The benchmark shares likely lack the momentum to push the index out of its recent 3046-3088 band, especially as the weekend kept players from taking firm positions.

Relatively safer stocks, whose businesses are less affected by the global economy, were among the prominent gainers. Investors also like these companies because of their regular dividend payments.

ComfortDelGro was the top performer on the STI and the transport operator closed 2.4% higher at S$1.715. Singapore Technologies Engineering was the second best performing stock, up 2.0% at S$3.54. Mobile operator StarHub rose 1.4% to S$3.72.

Fraser & Neave closed little changed after its shareholders agreed, as expected, to sell their stake in a beer joint venture to Heineken for about $4.6 billion, ending a two-month takeover saga. Shares shed 0.1% to S$8.88.

Cyclical stocks, those most exposed to the global economic environment, had fewer takers. Golden Agri-Resources shed 0.8% to S$0.660 while Noble Group was off 0.4% at S$1.325. Genting Singapore settled 0.4% lower at S$1.37.

22 September 2012

Singapore shares ended firmer Friday as riskier assets like equities were supported by ample liquidity and the prospect of more to come following moves by central banks to ease policy.

The 30-share Straits Times Index closed 0.5%, or 15.62 points, higher at 3078.23. The benchmark index gained 0.3% during the week. Gainers outnumbered decliners 292 to 139 while volumes were nearly unchanged at 1.43 billion shares.

"The euphoria over QE3 is mostly done and attention will shift back to the economic part of the equation," says Lee Kok Joo, head of research at Phillip Securities. "Attention will shift to whether there's any improvement in the macro outlook. This will be the catalyst for any rerating of the market going forward."

OCBC analyst Carey Wong said "the worse the economy does the better rewarded" the market is. "People are expecting money to pour into Asia," Mr. Wong said. "Singapore continues to be a relatively safe haven, so some of the funds are still coming here. Interest rates here are low. Then of course, there's a good chance the Singapore dollar could continue to appreciate."

Near-term resistance remains likely around the year-to-date high of 3088.

Cyclical plays received strong support with shipping company Neptune Orient Lines climbing 1.8% to S$1.145, Golden Agri-Resource up 0.8% at S$0.665 and Olam International 0.5% higher at S$2.05.

Maybank-Kim Eng has upgraded Neptune Orient Lines to Buy from Sell, saying the Federal Reserve's third round of quantitative easing and the European Union's bond-buying program offer a solid floor for the world-wide economy for now. "Take advantage of residual weak sentiment from NOL's exclusion from the STI to own a stock well poised to ride the recovery cycle," the house said.

Property stocks, which benefit from the low-interest rate environment, were also higher with both CapitaLand and City Developments up 1.4% at S$3.17 and S$11.63 respectively.

14th September 2012

Singapore shares surged Friday amid a broad Asian rally after the U.S. Federal Reserve announced an open-ended bond-buying program to boost the American economy.

"The Fed's blank check was enough to send all prices higher. This means 'risk on,' at least for now," UOB Economic-Treasury Research said in a note. But "one cannot help but wonder what would happen when this Dickensian market goes 'please sir, I want some more.'"

The 30-share Straits Times Index rose 1.3%, or 40.28 points, to close at 3070.42--its highest closing level since Aug. 6. For the week, the benchmark index ended 1.9% higher. In the broader market, volume climbed to 2.39 billion shares compared with 1.47 billion shares traded Thursday. Gainers outnumbered decliners 406 to 112.

DBS Vickers expects the benchmark index to gradually work toward 3200 in the fourth quarter, with 3050 and 3075 the two immediate levels to watch. While the STI may underperform the region, DBS Vickers said that "opportunities can be found among the cyclical stocks" such as commodity and offshore and marine names.

Commodity counters led the blue-chip charge, in which all but three STI components ended higher. Wilmar International soared 8% to a one-month high at S$3.24 while Noble Group climbed 5.5% to S$1.35--its highest close since April 4. Olam International, too, hit a one-month high, rising 5.1% to S$2.08. Golden Agri-Resources gained 3% to end at S$0.690.

Property plays also pushed higher, many of them reversing losses suffered Thursday. Hongkong Land led the way with a 2.2% rise to US$6.10 while City Developments added 2% to end at S$11.40. CapitaLand ended up 1% at S$3.18.

Singapore's two main rig builders rose to near-four week highs with Sembcorp Marine advancing 1.8% to S$5.08 and rival Keppel Corp. closing 1.2% higher at S$11.32.