Market Morning Wrap by Broker – 28 Mar 13

Baltic Dry: 922 -0.97% Gold: 1604.85 +0.72% Palm Crude: 2448 +0.45%
VIX: 13.15 +2.98% WTI Crude: 96.71 +0.13% USD/SGD: 1.2424 +0.18%
*Keppel Corp(KEP) unit FELS bags US$820m from Mexico’s Grupo R to deliver 4 jack-up rigs bet 2Q15 to 4Q15. When completed, FELS will have built 10 KFELS B Class jackup rigs for Mexican customers since 2012, incl. 2 for PEMEX.
Separately, KEP was the most shorted stock yday by value.

*(SIA)’s LCC subsidiary ‘Scoot’ is further exploiting the absence of a local LCC in Taiwan by selecting Sing-Taipei-Seoul Incheon as its 7th route.

*Mapletree Indus(MINT) in pact to develop data center for a unit of Equinix costing S$108m-217m; Land tenure at 30 yrs with completion date eyed 2H14.

*Nam Cheong(NCL) sold 6 vessels worth a total of US$72.1m to 2 of its existing customers & will contribute postively to earnings for current yr & the next.

*Mermaid Maritime (MMT SP) wins 2-yr drilling contract for ‘MTR-2’ in Indo; contract potential value ~ US$72m.

*United Engineers(UEM) says WBL offer price of S$4.15/shr will close @ 5.30PM on Apr 24 & is the highest in the 21 mths prior to the announcement of the 1st lapsed offer. Separately, talks of CEO Jackson Yap in the midst of planning the co.’s next move ie: looking at other acquisitions incl. hospitality segment.

*(OUE) increases multi-crncy MTN program to S$3b from S$1b.

*Capitaland(CAPL), Ascott Residence Trust (ART): Wee Chong Han resigned as Z deputy CEO of ART & assumed role at CAPL.


Market Wrap by Decoder – 28 Mar 13

• KR – Govt to announce stimulus package measures today. Financial stocks are moving ahead of the announcement. Side note, BOK economist estimates if housing price fall by 25% over the next 5 years, 250k household expects to go bankrupt.
• CN – Li Keqiang signals deeper bank marketization. 1398/939/3988 HK set for fiercer competition for loans and deposits amid fresh signals of market oriented interest rate reform. 1288/3328 HK already reported a fall in NIM last year.
• US Stocks staged a stunning turnover to pare early losses related to disappointing Italian bond auction, which cause euro to drop to a new 4 months low. Overnight markets closed near the intraday peak on the back of dovish commentary by Fed Reserve (Bank of Minneapolis) President Narayana. He said that the Central Bank can do more to get the economy back on track, other than the treasury/MBS buy back every month. He also added that the current monetary policy is not accommodative enough and should provide more stimulus to lower the stubborn unemployment to 5.5%.

Cyprus Program Isn’t ‘Template’ for Euro-Area Bailouts, EU Says

European governments vowed that the swoop on bank accounts to finance Cyprus’s aid package won’t set a precedent for future rescues, pushing back against the impression given by Dutch Finance Minister Jeroen Dijsselbloem, according to a confidential document obtained by Bloomberg News.

Noble, breakout of consolidating band?

noble 27 march 13

Noble recently announced earnings that were largely inline, while the operating earnings were slightly below expectations due to a weak 4Q12 agriculture performance driven by poor performance of Argentina/China crush operations.

Management is targetting US$100m of cost savings by mid 2013 and is looking at M&A opportunities. See recovery in agriculture as key earnings driver/to look out for asset recycle opportunities/oilseed processing plants in Ukraine/Brazil/South Africa to start operation in 2013 with significant contribution in 2014. Liquidity remains strong with cash/unutilized facilities @ US$5.9bn.

Technically, it has been consolidating within the band since Feb (refer to chart), a breakout today with vol might suggest that a reversal is underway. Key risk would still be the execution risk followed by country party risk.

Market Wrap by decoder – 27 Mar 13

• Korea –
I. Shipbuilding Price Index rebounded for the first time in 3 yrs
II. Apple may no longer use Samsung’s display.
III. N.Korea warns UN of impending danger of nuclear war.
IV. S.Korea issued military alert “Jindo Dog” (1 = highest stage of alert) @ boarder this morning and lifted it shortly after.
• MK – SIME Darby’s JV with Ramsay will unlock value via recognition of RM340m and leverage on Ramsay’s expertise to raise efficiency/grow the merged healthcare business.

• US equities rose to another record lvl after durable goods orders grew significantly more than expected (+5.7% vs 3.9% cons, -3.8% prior). Jan Case Shiller 20 City Home Price Index which came in higher (+8.1% vs +7.5% cons), also lifted sentiment in the markets. All 10 GICS sectors rose, led by healthcare. Cyprus’s saga seems to have already been factored in, as the worst case scenario of them leaving the Eurozone had been avoided. The ways to restructure the Cyprus banks have been widely debated and people seems to have accepted the fact of a bank closure and frozen deposits but a 40% haircut reported by one the unidentified sources will definitely fuel another round of unhappiness and shake the financial industry. Regional markets took the overnight cue to open higher but traded lower soon after. Would expect increased volume and volatility as we head into the end of Q1.

Market Wrap by broker – 27 Mar 13

Baltic Dry: 931 -0.43% Gold: 1600.82 +0.15% Palm Crude: 2437 -1.02%
VIX: 12.77 -7.06% WTI Crude: 96.16 -0.19% USD/SGD: 1.2406 +0.03%
*(OLAM) opens A$60m almond hulling & processing plant in South Australia to help them meet all the volumes of its upstream orchards.
*(SGX) is consulting the public on its 4 proposed FX futures contracts.
*PEC Ltd(PEC) buys a 27-yr leasehold ppty at 20 Benoi Lane for S$29m.
*Rotary Engrr(RTRY) bags 2 contracts worth S$42m: incl. S$30m engrr design, procurement, & cnstr contract & S$12m contract for fabrication & installation of pipe rack modules.
*RH Energy(RHE) to buy Chiwayland for S$399m with 549m shs & S$20m cash.
*Eastern Hldgs(EH) invested S$10m in the Schroder Asian Asset Income Fund.

Ppty Space:
*In a move to curb SHOEBOX SHOPS, URA will impose new rules on retail units at commercial or mixed-use developments, requiring them to be no less than 50sm on average from today. This will be taken as the total nett floor area divided by the number of retail units at a development. “They are not intended to be a cooling measure for strata retail market,” a URA spokesman said last night.
>>Recall that CHIP’s project, Alexandra Central, has an average shop
>>size of
<50sm. Of the 115 units, some 20% are shops measuring <15sm!. An estimate of
20 buyers bid for each unit when it was launched in Jan2013.
*Chip Eng Seng(CHIP): Agreed to buy San Centre, an office building along Chin Swee Road, for S$113m under a collective purchase. The transaction price fell only slightly short of marketing agent Jones Lang LaSalle's S$115-125m estimate.
*First REIT(FIRT) to buy 2 new hospitals in Indonesia for S$190.4m, & to boost NPI by S$18.8m & initial net ppty yield in access of 9%. Acquisition will expand FIRT’s portfolio to 14 ppty & target asset base of over S$1b.

Coeure said that euro group president Jeroen Dijsselbloem was wrong to suggest the revamp of the Cypriot banking system will serve as a model for other countries in the euro area.

Coeure: ECB Will Continue to Support Cyprus Banking System ECB Coeure: Cyprus is Not a Model for The Euro Zone ECB Coeure: Cyprus Situation is Completely Unique ECB’s Coeure: Lots of Work to be Done on Cyprus Banks ECB Coeure: Will Take Time For Cyprus Economy to Recover ECB Coeure: France Must Focus on Spending Cuts

Coeure said that euro group president Jeroen Dijsselbloem was wrong to suggest the revamp of the Cypriot banking system will serve as a model for other countries in the euro area.