Earning Outlook by DBSV

Earnings to decline by 17% for 2008 and 6% for 2009:
In 3Q08, the earnings for Singapore listed companies under our coverage dropped 7% yoy and 22% qoq, of which 32% were below expectations. Dismal outlook for 4Q08 led us to further cut estimates, and we expect 25% qoq decline in 4Q08. We have cut our earnings for 2008F and 2009F by 5% and 19% respectively. This resulted in earnings decline of 17% for 2008F and 6% for 2009F for STI stocks.

Earnings downgrades have yet to bottom – earnings risk for property and banking sectors. The sharper than expected drop in October NODX implies there is downside risk for GDP, pushing the economy into recession next year. MTI has cut its GDP growth forecasts to –1% to +2% for 2009 and 2.5%for 2008, on the back of weak 3Q08 GDP growth of –0.6% yoy and –6.8% qoq.

Against this backdrop, we expect earnings downgrades to continue for the next few quarters, the biggest risk lies in property and bank earnings, as provisions and write downs take centrestage due to asset devaluation. In 1998, net earnings decline by 40%.

12-month STI target upside cut to 2010 (base case) :
At 1613, the STI istrading at PE of 8.5x(08F) and 9x(09F) with dividend yield of 7.1%(08F). Our bottom-up target has been cut from 2983 to 2010 on revised earnings and de-rating, translating to 11.2x on FY09 earnings.

Bear target of 1250 on STI :
Given the deterioration in earnings, and assuming a recession scenario of –2% in GDP growth next year, the STI could test a low of 1250 if we apply 1998’s valuation metrics. As we are still in the early phase of a recession, we will pick stocks whose earnings are more resilient, such as consumer staples, media, telecoms, and utilities. We will sell on strength asset plays, as we expect more downside in asset values next year, as the effects of recession, job cuts and financial deleveraging exercises take its toll on asset plays including Properties, REITS, Shipping and Hotels.

SGX to launch extended settlement contracts on 23 Jan 09

Singapore Exchange Limited (SGX) announced today that it will launch Extended Settlement (ES) contracts on 23 January 2009. The launch is aimed at expanding the current suite of equity products available to investors.Previously referred to as Single Stock Derivatives (SSDs), ES contracts will be a new product class on the SGX Securities Trading (SGX-ST) market. The new product allows investors to buy into an underlying stock listed on SGX at the transacted price on the day of the trade, for settlement at a specified future date. Investors will have to put up an initial margin to trade ES contracts, which will be marked to market. ES contracts provide investors with an exchange-listed and -traded alternative to unregulated over-the-counter trades.To familiarise investors with the benefits and risks of trading the new product, SGX will work with its Member firms to extend its current investor education programmes in the 2.5 months between now and when the contracts are launched. Among various activities, participating brokers will be organising product education seminars in collaboration with SGX at venues such as the SGX auditorium in Shenton Way. “Extended Settlement contracts will be the first margin-based product in our securities trading market. The launch of ES contracts on SGX's securities platform will fill the current pressing need in the equity derivatives space for Singapore-based retail investors. It will also pave the way for more varied exchange-traded equity products to be introduced, and allow for hedging and arbitraging opportunities,” said Mr Chew Sutat, SGX Executive Vice President & Head of Market Development.“The Securities Association of Singapore is pleased to have had the opportunity to work closely with SGX, and at many levels, to develop Extended Settlement contracts as a new product and to get the trading infrastructure ready for the launch. All 10 local brokers welcome the opportunity to play a key role in training and preparing the professionals and informing and educating the investing public on how this new product can serve them well. We are excited about Extended Settlement contracts creating new interest and adding depth to our securities market,” said Mr Lim Eng Hai, Chief Executive Officer of the Securities Association of Singapore. ES contracts will offer the following benefits:- Exchange-traded and -cleared ES contracts facilitate orderly and transparent trading of forwards/futures needs and reflect the views of investors. Specifically, all short positions in ES contracts will be matched against equivalent long positions and open interest will be transparent and published. Both long and short positions are margined and marked-to-market for system integrity.- ES contracts enable more efficient margin-based trading. This provides better risk management for the industry and increased capital efficiency for long investors, which are especially relevant in volatile markets.- SGX expects that with the participation of liquidity providers, exchange-traded ES contracts will facilitate increased liquidity in the cash market for underlying securities which are impacted, thus benefiting all investors in the marketplace.The 10 stockbroking companies supporting the development and launch of Extended Settlement contracts are AmFraser Securities, CIMB-GK Securities, DBS Vickers Securities, DMG & Partners Securities, Kim Eng Securities, Lim & Tan Securities, OCBC Securities, Phillip Securities, UOB Kay Hian and Westcomb Securities.The key features of ES contracts are detailed in the Annex.
AnnexThe key features of ES contracts are:- Each contract will be for 35 days, starting from the 25th of each month until the last trading day (LTD) of the contract month, i.e. the 31st of the following month. - If the 25th and/or 31st are non-trading days, the contract will start from and end on the last trading days before those dates. For example, an ES contract that starts trading on 23 January 2009 will have its LTD on 27 February 2009.- Settlement will take place by way of delivery of the underlying securities on LTD plus three days (LTD+3). If bought on the first day of the ES contract, this gives investors up to 38 days to settle the contracts with the actual securities – 35 days longer than for normal securities investments.- Margins, which are a fraction of the full trade value, are required to be paid to trade ES contracts. The margins range from 5% to 20% of the cost of one lot of the underlying stock. The full amount of the trade is payable on settlement day, which is LTD+3.

DBS to lay off staff

This is not a good sign.

Singapore's DBS Group, Southeast Asia's biggest bank by assets, said Friday it was cutting 900 staff to trim costs amid the global credit crisis, and reported a slump in third quarter net profit. Chief executive Richard Stanley said most of the cuts, to be carried out at the end of the month, will come from its offices in Singapore and Hong Kong and will account for six per cent of the workforce. He added that this was the largest job cut ever. The job cut will be across all businesses and all levels. Laid off staff will be paid the equivalent of one month's salary for every year of service as per market practice. DBS said it has no plans to cut beyond this and also clarified that there are no plans for salary cuts.

Back in 2001, DBS laid off 200 staff in Singapore and implemented pay cuts. “To be a streamlined organisation, I believe we must run a tighter ship," he told reporters." We have been vigilant on costs but as the economy enters a more difficult and uncertain phase, many financial institutions around the world and in Asia have made headcount reductions," he added. "To be more productive and efficient, we will restructure and streamline the organisation. Regrettably, this has resulted in the need to reduce our workforce by six percent or about 900 people, primarily (in) Singapore and Hong Kong, by the end of the month."

Earlier Friday DBS said net profit in the three months to September fell 38 per cent as market-related income took a hit from the global financial crisis and bigger provisions. Third quarter net profit totalled S$379 million (US$256 million), down from S$610 million in the same period last year, it said in a statement. Analysts polled by Dow Jones Newswires had predicted an average S$572 million net profit. "The operating environment is increasingly challenging for financial institutions the world over," Stanley said. "We took upfront prudential levels of allowances to strengthen our balance sheet and with strong capital and liquidity, I believe we are well positioned to ride out the uncertainties ahead." Net interest income in the September quarter grew two per cent to S$1.07 billion from last year but net fee and commission revenues dropped 22 per cent to S$316 million. Other non-interest income plunged 87 per cent on the year to S$11 million. The bank said it set aside S$129 million in provisions, compared with just S$10 million a year ago, partly to cover its collateralised debt obligations (CDOs) portfolio. CDOs are securities backed by a range of assets including bonds, loans and their derivatives, including corporate loans, high-grade mortgages, subprime mortgages, car loans and credit card debt.

DBS was the last of three local banks to report earnings for the September quarter. Oversea-Chinese Banking Corp (OCBC) said earlier this week third quarter net profit fell 13 per cent while United Overseas Bank reported last week a 5.1 per cent drop in profit for the same period. -

European Markets Down Despite Interest Rate Cut- Not a very good sign for the stock market

Thursday November 6, 8:44 am ET By Pan Pylas, AP Business Writer

LONDON (AP) -- European stock markets traded down Thursday after heavy sell-offs on Wall Street and Asia despite interest rate cuts across the continent, including a much bigger than anticipated reduction from the Bank of England.

The FTSE 100 index of leading British shares was down 167.72 points, or 3.7 percent, at 4,363.01, while Germany's DAX was 211.66, or 4.1 percent, lower at 4,955.21. France's CAC-40 was down 127.33 points, or 3.5 percent, at 3,490.78.

Except for some volatility after the interest rate cuts from the Bank of England and the European Central Bank and an unscheduled reduction by the Swiss Central Bank, Europe's stock indexes were still more or less at the level they were before the decisions.

While the Bank of England slashed its benchmark rate by 1.5 percentage points to 3.00 percent, its biggest cut since March 1981, the European Central Bank and the Swiss National Bank opted for more modest half-point reductions. The Czech Republic's central bank cut by three-quarters of a point.

The Bank of England's bigger than anticipated rate cut stoked expectations that the European Central Bank would be more aggressive than expected. Its decision to cut by only a half-percent disappointed investors looking for more aggressive action.

"The ECB rate cut came as a disappointment in the end after far more aggressive action from the Bank of England," said Jennifer McKeown, European economist at Capital Economics.
The failure of the FTSE to rally strongly in the wake of the Bank of England's aggressive interest rate cut indicated that the bank may have further reinforced fears about the length and depth of the recession in Britain.

"Traders are thinking, if we've really got to cut rates to 3 percent, then how bad is it out there," said Mic Mills, senior trader at ETX Capital.

"Recessionary fears were bad before; they just got a whole lot worse," he added.

Company result and news

FibreChem Technologies Ltd. (FBCM SP): The manufacturer andseller of chemical fiber products said third-quarter net incomefell 19 percent from a year earlier to HK$120.6 million ($16million) because of higher raw material costs and other expenses.FibreChem was unchanged at 27.5 Singapore cents.

Frasers Centrepoint Trust (FCT SP): The owner of shoppingmalls in Singapore said it will distribute S$8.1 million ($5.5million) to shareholders for the third quarter, 27 percent lessthan a year earlier. Frasers Centrepoint retreated 1.5 Singaporecents, or 2.2 percent, to 66.5 cents.

Great Eastern Holdings Ltd. (GE SP): The biggest lifeinsurer by assets in Singapore and Malaysia said third-quarterprofit rose 9 percent from a year earlier to S$135.2 million.Shares of the company were upgraded to ``buy'' from ``sell'' atCitigroup Inc. following the earnings. Great Eastern climbed 3 cents, or 0.3 percent, to S$9.18.Oversea-Chinese Banking Corp. (OCBC SP), the largest shareholderin the insurer, gained 29 cents, or 5.9 percent, to S$5.19.

Olam International Ltd. (OLAM SP): The Singapore-basedcommodities supplier had its share-price forecast cut to 69Singapore cents from 94 cents at ABN Amro Holdings NV, which saidthat the credit crunch could restrict trade and hamper thecompany's volume growth. The brokerage has a ``neutral'' ratingon the stock. Olam added 4 cents, or 3.2 percent, to S$1.30.

Singapore Airport Terminal Services Ltd. (SATS SP): Thecatering and ground-handling unit of Singapore Airlines Ltd. (SIASP) said second-quarter net income fell 33 percent from a yearearlier to S$32.4 million because of a decline in contributionsfrom its units and higher expenses. The stock rallied 6 cents, or4.1 percent to S$1.53.

Singapore Exchange Ltd. (SGX SP): The operator of the city-state's securities and derivatives markets said it entered into apreliminary agreement with the Fujian government to encouragecompanies in the Chinese province to list their shares inSingapore. Singapore Exchange rose 25 cents, or 4.9 percent, toS$5.35.

Singapore Telecommunications Ltd. (ST SP): Southeast Asia'slargest phone company said currency movements hurt fiscal second-quarter earnings because of contributions from overseasoperations. Singapore Telecom advanced 8 cents, or 3.3 percent,to S$2.51.

STI : Good Volume; Election Boost - CIMB

Dow Jones] Singapore shares holding onto good gains in decent volume as imminent U.S. election eyed as potential catalyst; STI +4.8% at 1880.88 at midday with resistance tipped at Oct. 22 intraday high of 1895. "Expectations that the new government will have to get down to the job of turning around the U.S. economy may continue to support optimism that the worst is over for holders of equities," says CIMB. Gains widely based with all sub-sector indexes higher; biggest blue chip risers include Golden Agri (E5H.SG) +15.8% at S$0.22, Keppel Corp. (BN4.SG) +9.8% at S$4.92. Broad market volume markedly higher than in recent weeks; gainers outnumber losers 4 to 1.

Is the worst over?

The credit crunch may be over, but I dont think the worse is over. Wall Street's problems may be over but Main Street's problems may just be starting.

Problems over the past 2 months have affected the overall economy. In US, we will see more companies reporting lower profit as business slowed. There will be more layoff. Unemployment will increase, spending will be lower. This will affect business all over the world.

We are hearing reports of China getting less orders from the US for manufacturing products. This will result in China's companies reporting poorer results. When companies report poorer result, EPS will be lowered and hence price of those companies will be re rated lower.

Singapore listed companies will not be spared this problems. Over the next 2 weeks, we will be going into 3Q reporting season. You can expect many companies to report lower earning. When that happens, expect sentiment to be dampened and share prices to be lower.

It may take a few more months before business and economy pick up steam again. That will be the time when the worse is over.

Keppel Land 3Q results – Cautious outlook

CLSA take on Keppel Land

We have yet to officially cover this stock. Dhruv has gone through the results and management commentary is rather cautious on all segments, with Singapore office related comments getting more conservative now. Earlier they commented on balanced demand and supply for the next few years, now they only talk about supply being low till 2009. Also no estimate has been given on office supply demand. Outlook on Singapore and China residential has also tapered down.
We also see a slowdown in launches. As of June 30 08, 777 Singaporean units were planned to be launched in 2H08. Only 498 units have actually been launched. Marina Bay Suites and The Promont launch has been delayed to 2009 now. Within the Chinese market, the earlier target of 3,705 new units getting launched in 2009, has now been lowered to 2,796 units.

MBFC pre-let progress looks weak. As of 3Q08 end, 61% of the space at the MBFC has been pre-leased, up only 1% from 2Q08. Phase I is now 66% committed (up from 64% in 2Q08), while Phase 2 has been 55% pre-leased (flat QoQ). This means that only 32k of new space was pre-leased in the quarter, against news flow of over 230k. We need to check.

On the results: 3Q08 revenue arrived at S$185.7m, down 51% YoY and flat QoQ. Sequential revenue from residential property sales dropped 3%QoQ, but that from hotels/resort/property management business grew 40%QoQ.
Reported 3Q08 PATMI arrived at S$46.2, down 44% YoY and 12% QoQ. Excluding the on-off gains in 2Q08, 3Q08 PATMI was actually up 2%QoQ. Sequential earnings from residential property sales grew 44%, while profits from hotel operation turned negative (3Q08 registered a loss of S$10.5m, against a S$2.5m profit seen in 2Q08).
Earnings are largely below consensus as 3Q09 PATMI of S$159.1m, is about 62% for consensus full year 2009 estimates.
New residential units sales in the quarter were limited. 14 new units were sold at Reflections (S$2000psf), while 28 were sold at Park Infinia and Tresor (S$1500-1600psf).
Net debt to equity remains at 54%, no change. Only 7% of the debt is coming for refinancing in a year. Funding costs are at 2.5%, but only 15% of the company's borrowings are at fixed rates.

Market yet to reach its bottom!

The market continued to search for a bottom Wednesday, as a fresh round of disappointment over corporate earnings offered further proof that a turning point has not yet arrived.

Market analysts have been racing to call a market bottom in recent weeks as stocks have shed more than 30 percent of their value from the highs of a year ago this month.

But the emerging consensus is that a true bottom—and a subsequent turning point—won't happen until at least the early part of 2009.

Credit Crisis Hits Global Shipping-Moody's Economy

[Dow Jones] STOCK CALL: Asia's export-oriented economies facing "double-whammy" from falling consumer demand and crisis of confidence in funding, with reports of banks refusing to honor letters of credit, "the lifeblood of international trade flows," says Moody's Economy.com's Matt Robinson. Says letters of credit, essentially an I.O.U. between importer and exporter, allow exporters to load cargo for shipment with assurance of being paid; at the other end they demonstrate security of supply, enabling importers to negotiate distribution, promotion with retailers. "In short, the whole global trade production line relies on letters of credit. No letters of credit, no transactions - and no transactions mean no international trade." Robinson reckons price distortions will follow if demand, albeit slowed, outstrips supply as vessels remain stuck in home ports. Adds, consumers could also face shortages, "as shipments of foodstuffs and grain lay stranded overseas."

DBS and it wealth management products

http://swissyen.blogspot.com/2008/10/lehman-minibond-impact-on-banks.html


Among the banks, DBS price came down more than the other 2 banks. There can be 2 reasons for this sharper fall compared to the other 2 banks.

DBS High Notes, Lehman Mini Bond.
1. Recent statement by the government is having a bad impact.
2. DBS HK office may suffer from having to buy back Lehman Mini Bond from investors.

There is a JP Morgan research report on this matter, which is sent to you email. Do take a look at it.

Ezra

Many downgrades despite the good result, which was below analyst's expectation.

Alarming to see CIMB and OCBC Sec lowering their price target despite recommending buying the stock. CIMB cuts it price target for Ezra from 3.08 to 1.05, while OCBC's fair value is now 1.20 down from 3.30 previously. DMG cuts its target price from 2.30 to 0.67.

Another company in cash flow problem- Sun East

(Dow Jones)--Sun East Group Ltd. (Y35.SG) Tuesday said that it has breached certain financial covenants of a $15 million floating rate note due in 2009, making the outstanding amount immediately payable.

The Hong Kong-based beauty and cosmetics firm is currently in discussions with Deutsche Bank AG on how to settle the debt, it said in a filing with the Singapore Exchange.
The company said it hasn't been able to obtain any alternative source of financing.

What the Pros say

CNBC.com
17 Oct 2008 08:44 AM ET

Stock markets rose across the world Friday, rebounding from two days of losses. Investors have shifted their attention from the volatile financial crisis to the prospect of a global recession.
CNBC's experts weigh in on the worst case scenario and where to find safety in the yo-yoing markets.

Worst Case Scenario
If the world slips into a severe recession, global GDP could fall as much as 10% over a number of years, says Christoffer Moltke-Leth, head of sales trading, Asia Pacific at Saxo Capital Markets.

Volatility to Continue
Volatility is going continue for the rest of the year, believes Michael Yoshikami, founder, president & chief investment strategist at YCMNet Advisors.

Recession: How Long, How Deep?
We're going to definitely shrink about 2% in the current quarter, if not possibly at twice that pace. Stocks could possibly bottom sometime in the next couple of months, depending on the economy not being much weaker past the first quarter of next year, Joseph LaVorgna from Deutsch Bank predicts of the economy.

Commodities to Slump Further
The recent selloff in commodities is set to intensify and could cut another 30% to 40% from the Goldman Sachs Commodity Index, Phil Roberts from Barclays Capital told CNBC, adding oil could slump toward $50 a barrel.

History Says Don't Give In
We are in a recession and historically, when you find yourself in a recession, getting out of stocks is really a bad idea, Ernie Ankrim from Russell Investments told CNBC, although he warns investors to stay away from oil.
Treasurys don't offer too much to the upside, Ankrim added.

What Will Withstand the Turmoil?
With such wild swings seen on Wall Street almost a daily affair, how does one invest? Michael Yoshikami, founder, president & chief investment strategist at YCMNet Advisors thinks there can be good opportunities when fear and panic reign in the markets, like heavyweights Johnson & Johnson and McDonalds.

Buying into Bonds
Billionaire and investor Warren Buffett says he is getting back into American stocks, but is it the right time? Laurent Fransolet, head of European interest rates strategy at Barclays Capital still sees opportunities in the European bond market.

Still Stay on the Sidelines
The S&P 500 index is still in a downtrend for the short term, however, the Nikkei 225 Average is close to a recovery, Royce Tostrams, technical analyst at Tostrams Groep said Friday, adding that both markets are far away from buying levels.

Look for Big Names
The world's on sale right now and investors should invest in the companies with big bank accounts and big cash, like tech giants Microsoft, Oracle, Google, Dave Maney from Headwaters MB said.
Look for big names, Stefan Abrams from Bryden-Abrams Investment Management, added.

Asian Stocks Seen Rebounding Soon
The Asian stocks have already hit their bottom, thinks Daniel McCormack, equity strategist at Macquarie Securities. He tells CNBC that in the next six weeks, Asian stocks could do reasonably well.

Chinese Stocks Have Bottomed
Craig Russell, chief market strategist, China at Saxo Bank believes the Chinese stock markets have bottomed. He tells CNBC that the Shanghai Composite could trade as high as 2,500 by year-end.

Top Picks in Asia Pacific
In the Asia Pacific region, Mark Matthews, chief Asia strategist at Merrill Lynch is heavily overweight on Australia, Hong Kong and China.

Aussie Dollar to Weaken Further
The Aussie dollar could weaken against the greenback over the medium-term, predicts Richard Grace, chief currency strategist at Commonwealth Bank of Australia.


Source : http://www.cnbc.com/

Lehman Minibond impact on Banks

There will be impact on banks, if banks were to compensate buyers of Minibond. Do take this consideration into account when bargain hunting for banks........Nicholas Tan

"The Monetary Authority of Singapore (MAS) said on Friday it is probing allegations of misconduct in the sale of financial products linked to collapsed US investment bank Lehman Brothers and other institutions. The country's central bank will focus on cases of mis-selling products to "vulnerable" customers, meaning the elderly and those who are not well-educated, MAS managing director Heng Swee Keat told a news conference.

MAS does not normally comment on dealings with individual institutions, he said in a statement issued at the news conference. "However, given public interest in this matter, MAS confirms that we have been conducting formal inquiries into allegation of breaches of law, inadequate internal controls by the FIs (financial institutions) or poor sales practices by their representatives." MAS would not elaborate on its probe but said it will announce "any actions" when inquiries are complete. Heng said MAS, the de facto central bank, has told financial institutions to give priority to cases involving vulnerable investors and not to take an "overly legalistic approach to mis-selling in dealing" with them. In cases where there is sufficient evidence that the product was mis-sold, the financial institution should take responsibility, Heng said.

MAS has said that about 10,000 people in Singapore invested in products linked to Lehman Brothers and other institutions hit by a crisis in the US financial heartland of Wall Street.

Many of the Singapore investors, a large portion of them retirees who stand to lose their life savings, have said they were told they were buying into a product with low risk. A 62-year-old businessman who could lose S$200,000 in Lehman Brothers-linked minibonds, told AFP he was offered the product even though he said he was not a risk-taker. "I even signed a survey form on my profile which said very clearly that I am not a high-risk gambler, but still they offered me the product," he said.

Hong Kong banks on Friday agreed to buy back minibonds linked to Lehman Brothers at market value, an industry spokesman said. The extraordinary move came as regulators in the southern Chinese financial hub said they had referred 24 cases of possible mis-selling of the investment products to the Securities and Futures Commission."

Sources of info : http://www.channelnewsasia.com/stories/singaporebusinessnews/print/383557/1/.html

Back to Blogspot

I am moving back to this Blog due to technical problems at www.trnicholas.spaces.lives.com.

Change of Blog Site

Hi

My new Blog site is www.trnicholastan.spaces.live.com.

Notice

No post for the next couple of days, moving house next week. Will keep you informed.

Delong - CIMB call

Delong Holdings (DLNG SP, $3.10, SELL): Time’s nearly up. Just under one month is left before the call/put option between Evraz and Delong's major shareholder, Best Decade expires on 18 Aug 08. We believe the Chinese government is unlikely to approve Evraz's proposed takeover of Best Decade's stake in Delong. We recommend selling Delong given expensive CY09 P/E of 27x against peers' 7.5-10x. Our target price is S$2.09, based on 2.3x CY08 P/BV.

Price is holding up in the hope of a successful takeover. With the expiry of the option, price is likely to drop due to Delong expensive valuation compared to its peers. Do take care.

July 21 (Bloomberg) -- U.S. stock futures tumbled after the close of U.S. exchanges, dragged down by lower-than-estimated earnings at American Express Co. and disappointing forecasts at Apple Inc. Treasury yields and the dollar also dropped.

American Express, the biggest U.S. credit card company by purchases, fell 11 percent from its 4 p.m. close after second- quarter profit trailed analysts' estimates by 32 percent. American Express Co. said profit dropped because more consumers defaulted on loans, raising concern the U.S. economic slowdown will deepen.

Apple, maker of the iPod music player, lost 6.5 percent after saying sales and earnings will fall short of projections. SandDisk Corp. tumbled 12 percent after reporting a loss.

``This whole earnings season will be somewhat choppy,'' said Eric Marshall, who helps oversee $1.4 billion at Hodges Capital Management Inc. in Dallas. ``The technology companies that are more tied to making components or semiconductors or cell phones, those are more likely to be impacted by weakness in consumer spending.''

STI +2.5%; 2945 Cap; Bias Toward Downside - DBSV

Singapore blue chips sharply higher, drawing strength from rally in Hong Kong market (HSI last +3.2%), propelling STI past 2900 for 1st time since July 14. Index +2.5% at 2917.69 midday, with 28 out of 30 components up, Thai Beverage (Y92.SG) unchanged at S$0.225, Starhub (CC3.SG) down 1.1% at S$2.80. STI's resistance expected at 2945, based on 38.2% Fibonacci retracement of rise to May high of 3269 from 2008 low of 2745. Despite gains, DBS Vickers says STI still biased down; "while the pullback in oil and commodities prices bode well for equities, uncertainties surrounding the earnings season and concerns about a slowdown in economic growth continue to weigh down on stocks." FTSE ST All Share Index +2.1% at 729.79. Overall volume slightly more than half of Friday's total of 1.05 billion shares.

Asian Palm Oil Fundamentals Still Bullish - CS

Last week's Massive sell down in Asian palm oil stocks occurred despite any real change in still bullish fundamentals, says Credit Suisse. "This is a reflection of investors unwinding a crowded trade, and the fact that the plantation stocks have been very resilient amidst a global equity sell down," broker says in note. Adds, "but its bullish fundamentals have not changed. Our view is that palm oil stocks will outperform over a 12-month view because there is a real shortage of edible oils and palm oil is one of the few inflation hedges." Says upside catalysts for palm oil price include fact soy oil at big premium, vegetable oil inventories still low, geopolitical risks could send crude oil price higher. Reiterates Overweight call on Asian palm oil sector, says Indofood Agri remains favored palm play. Rates Indofood Agri (5JS.SG) Outperform with S$3.28 target price; Wilmar (F34.SG) Neutral with S$5.40 target price. Latest prices; Indofood Agri down 0.5% at S$1.84, Wilmar +1.0% at S$4.14.

Straits Asia +3.2%; Value Emerging - DBS Vickers

Straits Asia Resources (AJ1.SG) +3.2% at S$2.58, riding market uptick (STI last +2.1%) but struggles to recover Friday's 10.1% fall as investors remain concerned retreating oil prices may signal reduced demand for alternative fuel sources like coal. "We believe the recent price correction is unjustified, which has resulted in value emergence for SAR," says DBS Vickers, which has Buy call with S$4.77 target, based on 20.2X FY08 P/E. While stock remains oversold on RSI, Stochastic Oscillator, Money Flow Index, chance of near-term technical rebound low given subdued volume. Resistance expected at 10-day moving average of around S$2.83.

Right Time To Consider Singapore Value Plays-CIMB

Time is right to look at Singapore value plays, says CIMB; names top value picks as Ascott Residence Trust (A68U.SG), Broadway Industrial (B69.SG), DBS (D05.SG), FerroChina (F33.SG), Ho Bee (H13.SG). "As stocks get pummeled, value is starting to emerge," adds, "after focus in the last few weeks on the attractiveness of dividend yielding stocks in the current environment of EPS uncertainty and negative real interest rates, we now divert our attention to another investing style." Broker uses price/book value as bargain hunting strategy; says its top picks cheap relative to their historical price/book values; also have sustainable, lower risk returns on equity.

CIMB Cuts S'pore Plantations To Underweight

CIMB Downgrades Indofood Agri To Underperform.

CIMB Downgrades Wilmar To Neutral; S$5.20 Target

CIMB Cuts Golden Agri To Neutral; S$0.94 Target

CIMB downgrades Singapore plantation sector to Underweight from Overweight to reflect worries on regulatory environment. Says, "given rising regulatory risks and a slowing earnings momentum, we can no longer justify the large P/E premium accorded to the sector." Latest prices; Wilmar (F34.SG) +0.5% at S$4.33; Indofood Agri (5JS.SG) down 1.4% at S$2.04; Golden Agri (E5H.SG) down 0.6% at S$0.765; First Resources (EB5.SG) down 1.9% at S$1.03.

SPC- Kim Eng's View

Beneficiary of current high oil price environment Singapore Petroleum Company (SPC) has seen its earnings grow by leaps and bounds in the current high oil price environment, from loss-making in FY01 to a net profit of S$508.4m in FY07. While earnings may continue to be highly variable because of volatile refining margins, this will be progressively augmented by its upstream earnings.
Attractive dividend yield of 9.0% SPC has been rewarding shareholders during in its current purple patch, having paid out over 60% of earnings in the last two financial years. We expect SPC to stick to this payout level, which would result in a DPS of 63 cts per share in FY08. Dividend yield is a very attractive 9%.

How Bad Is It? Some Say Crisis Worst Since Great Depression

Just a reminder, dont get carry away.

If crisis (and chaos) breeds opportunity, Tuesday was a prime day to get long stocks -- as Wednesday's robust rally seems to suggest.
In an extraordinary series of events, President Bush and Fed Chairman Ben Bernanke gave dueling presentations as policymakers and politicians tripped over themselves to address the nation's financial crisis.
Some observers, like NYU economist Nouriel Roubini, believe this crisis is the worst since the Great Depression, and the "run on the bank" at IndyMac does evoke that era of bank failures.
But "worst since the Depression" doesn't mean things will get as bad as the 1930s, when the U.S. unemployment rate hit 25% -- or even the S&L crisis of the late 1980s.
While it's critical to note the current situation isn't nearly as bad as past crises, it's also important to keep in mind that the Great Depression was an era, not an event -- meaning the current situation could get a lot worse.

Shares close mixed on Wednesday

Singapore share prices closed mixed on Wednesday as selling pressure eased while investors waited for fresh leads from US financial markets, dealers said. The Straits Times Index (STI) closed 0.16 per cent or 4.57 points higher at 2,835.32. Volume was 927.7 million shares. In the broader market, losers led gainers 275 to 213. Dealers expect the market to trade in a small range, with upside for the STI capped at 2,880 points and the support level at 2,800 points. "Stay defensive. If you have to buy, buy those with high yields like some of the REITs (real estate investment trusts)," said one dealer. US Federal Reserve chairman Ben Bernanke said on Tuesday there was a "high degree of uncertainty" about the US economic outlook.

Bernanke: economy faces 'numerous difficulties'

WASHINGTON (AP) -- Federal Reserve Chairman Ben Bernanke told Congress Tuesday that the fragile economy is being confronted by "numerous difficulties" including persistent strains in financial markets, rising joblessness and housing problems -- despite the Fed's aggressive interest rate reductions and other fortifying steps over the past year.

At the same time, Bernanke, testifying before the Senate Banking Committee, sounded another warning that rising prices for energy and food are elevating inflation risks. The situation, he said, poses "significant challenges" for Fed policymakers as they try to chart the best course for keeping the economy growing, while making sure inflation doesn't dangerously flare up. All the economy's problems, including slumping home values, which threaten to make people feel less wealthy and less inclined to spend in the months ahead, represent "significant downside risks" to economic growth.

Over the rest of this year, the economy will grow "appreciably below its trend rate" mostly because of continued weakness in housing markets, high energy prices and tight credit conditions. Inflation has remained high and "seems likely to move temporarily higher in the near term," he warned. Indeed, before Bernanke testified, the Labor Department reported wholesale prices jumped 1.8 percent in June. That left inflation rising over the past year at the fastest pace in more than a quarter century. "Given the high degree of uncertainty" about the Fed's economic outlook, Fed policymakers will need to carefully assess incoming information about inflation and economic growth, he said.

The Fed in June signaled an end to its nearly year long rate-cutting campaign because of growing concerns about inflation. Bernanke kept up his tough anti-inflation talk on Tuesday but stressed many other problems that could short circuit economic growth. He seemed to be keeping his options open in terms of rates. Given all the risky cross currents, economists believe the Fed will leave rates alone when they meet on Aug. 5. Righting wobbly financial markets is key to getting the economy back on track, he said. "In general, healthy economic growth depends on well-functioning financial markets," Bernanke said. "Consequently, helping the financial markets to return to more normal functioning will continue to be a top priority," he said. Bernanke's testimony comes just two days after the Fed and the Treasury Department came to the rescue of mortgage giants Fannie Mae and Freddie Mac, offering to throw them a financial lifeline.

The companies hold or guarantee more than $5 trillion in mortgages -- almost half of the nation's total. The Bush administration is asking Congress to temporarily increase lines of credit to Fannie and Freddie and to let the government buy their stock. The Fed has offered to let the companies draw emergency loans. The pledges of aid have raised concerns about the government's role in such financial problems and the risk to taxpayers.

Bernanke said investors are nervous in general because of the cloudy outlook for the economy and credit conditions, feeding a vicious cycle that can be hard to break. "Many financial markets and institutions remain under considerable stress, in part because the outlook for the economy and thus for credit quality, remains uncertain."

Going ahead, market is not likely to be rosy, will be bad for many more months. :(

STI Off 1.8%; May Test 2745 In Weeks - Kim Eng

[Dow Jones] Sentiment in Singapore stock market remains edgy, mirroring risk aversion across Asian bourses, given uncertainty over impact of U.S. housing, credit troubles. STI down 1.8% at 2851.42 midday, after briefly breaching 2850 for 1st time since March 20, hitting 2843.59 intraday low; psychological support eyed at 2830 (March 19 intraday low). "We now accord a high probability that 2745 will be tested in the coming weeks or months as the final defense line at 2946 (61.8% Fibonacci level between March low of 2745 and May high of 3269) has already given way two weeks back," says Kim Eng Securities; expects STI to test 2745 if DJIA corrects to 9500 (DJIA closed down 0.4% at 11055.19 overnight). All 19 FTSE ST sub-indexes in red, with All Share Index down 1.7% at 717.38. Overall volume thin, with 367 decliners vs 99 gainers.

July 15 (Bloomberg) -- China's stocks fell the most in two weeks, led by banks and insurers, on concern they are holding debt issued by Fannie Mae and Freddie Mac, the two U.S. mortgage- finance companies that lost half their market value last week on concern about their ability to refinance.

July 15 (Bloomberg) -- Japanese stocks fell the most in a week amid concern a lack of capital will cause some U.S. banks to collapse and after a rescue package for mortgage lenders failed to stem an equity sell-off.


July 15 (Bloomberg) -- Asian stocks fell for a second day, led by financial companies, as concern mounted credit-market losses will widen after a report said Japan's top three banks hold more than $40 billion in Fannie Mae and Freddie Mac debt.

Region stock market is feeling the effects of Fannie Mae and Freddie Mac. Banks mostly weak on concern of their holding of bond from Mae and Mac.

S'pore Property Stocks Fall; CS Keeps Underweight

Singapore property heavyweights among worst blue chip performers due to slowing property price appreciation, rising construction costs. City Developments (C09.SG) down 3.2% at S$10.86, Keppel Land (K17.SG) down 3.5% at S$4.67 vs STI down 1.2%. Credit Suisse notes potential rescinding of Tampines Court en bloc sale; says this demonstrates current weak environment, "we believe it underscores the risk of increasing construction costs for the developers' bottom lines, as well as developers' weaker confidence and pricing power, even for mass-market projects." Broker reiterates Underweight call on Singapore property sector. Charts show moderate volume, suggests shares could extend fall slightly. Immediate support for City Developments tipped at 30-day moving average of S$10.80; support for Keppel Land eyed at last week's intraday low of S$4.65.

Palm Plays Bounce Back From Biofuel Selloff

Dow Jones] Singapore palm plays heading higher as stocks recover somewhat from recent selloff on worries that political opinion may be turning against biofuels. Wilmar (F34.SG) +0.4% at S$4.74, Indofood Agri Resources (5JS.SG) +1.8% at S$2.24, Golden Agri-Resources (E5H.SG) +0.6% at S$0.79, First Resources (EB5.SG) flat at S$1.10. All outperforming FTSE ST All Share, currently down 0.1%. Credit Suisse notes, U.K. government backtracked from biofuel targets, driven by worries that use of land for biofuels may push up food prices. But says, according to forecasting service Oil World, global edible oil output not currently enough to meet governments' biofuel target in any case; adds surge in soy oil prices should also boost demand for palm oil, given big price gap vs palm. Reiterates Overweight call on Asian Palm oil sector.

STI +1.1% On NY Times Bailout Report; 2950 Cap

[Dow Jones] STI turns higher on New York Times report that Bush administration evaluating plan that could see U.S. government take over Fannie Mae (FNM), Freddie Mac (FRE) or both. STI +1.1% at 2932.11 at midday break vs 2889.66 intraday low; resistance tipped near this week's intraday high at 2950. "That's giving us some comfort," says dealer at local house. Bank heavyweights lead gains, supporting index; DBS (D05.SG) +1.9% at S$19.04, OCBC (O39.SG) +2.5% at S$8.20. Broad market volume remains thin but gainers now outnumber losers nearly 2 to 1.

DJ MARKET TALK: STI Off 0.9%; 2Q GDP Keeps Mood Cautious-Trader

STI heading slightly lower again at start of afternoon session despite mild bullish lead from U.S. pre-market futures; STI down 0.9% at 2890.43, support tipped at last week's intraday low of 2862. STI failing to follow HSI, Nikkei into positive territory; trader at local house says this may be down to weaker-than-expected advance 2Q Singapore GDP; "we might be underperforming because of the GDP figures, although the main problem is there's just no catalyst to buy right now." Broad market volumes remain thin with losers outnumbering gainers 341 to 119.

Large Cap S-Chips Ride High On China Index Rally

Selected Singapore-listed China plays, or S-chips, making good gains as rally in China indexes support local market. Big S-chip gainers include Yanlord (Z25.SG) +7.0% at S$1.98, Synear (Z75.SG) +6.0% at S$0.44, Bio-Treat (B22.SG) +5.6% at S$0.285, Ferrochina (F33.SG) +5.4% at S$1.17. Outperformance of recently launched FTSE ST China Top 20 index vs wider FTSE ST China index, suggests investors favoring large cap China plays over smaller caps; launch of new index may attracted buying interest; FTSE ST China Top 20 +2.3% at 413.56 vs FTSE ST China +1.3% at 406.79 (STI +0.9%). "The new China top 20 index might be causing more people to take a look at these stocks," says trader at local house. Charts show decent traded volume, oversold signals from technical indicators; suggests stocks may have tad more upside.

S'pore Plantation Stocks Mixed Ahead Of CPO Data

[Dow Jones] Singapore plantation stocks mixed as investors still mulling EU's plans to cut back use of biofuel in bid to tame rising food prices, while awaiting Malaysian Palm Oil Board's June CPO data due later today. Wilmar (F34.SG) off 1.1% at S$4.62, Golden Agri-Resources (E5H.SG) flat at S$0.79, First Resources (EB5.SG) +0.9% at S$1.11, Indofood Agri Resources (5JS.SG) off 0.4% at S$2.25. "A high inventory level could further dampen CPO prices and also cap the upside," says UOB KayHian. Adds, any further weakness in share price of sector's leader Wilmar, will offer buying opportunity; suggests entry price of S$4.30. Retains Sell rating on Wilmar for time being with S$4.80 target, keeps Buy call on others, with unchanged target price of S$1.65 for First Resources, S$1.32 for Golden Agri, Indofood at S$3.55

S-Chips Outlook Hazy; Seek Out Value - Citigroup

[Dow Jones] Singapore-listed China stocks, or S-chips, face cloudy outlook due to slowing growth momentum, earnings uncertainty, says Citigroup. Broker notes, 1Q08 results showed downward trend in profit margins, consensus on FY08/FY09 earnings forecasts also suggest slowing growth momentum. Says, recent data shows China consumer confidence dipped; high commodity prices, rising wage costs will add to pressure. Advises investors to seek out oversold opportunities; "in view of the reduced earnings visibility, we prefer to take a value-oriented approach in picking S-chips." Screens S-chips for low PE multiples, net cash position; says on that basis best picks are Li Heng (E9A.SG), China Sky (E90.SG), Fibrechem (F12.SG), Celestial (C56.SG), Sino Techfibre (AD8.SG), JES (EG0.SG), Pan Hong Property (P36.SG), Beauty China (B15.SG) and Longcheer (L28.SG). FTSE ST China index currently +2.3% at 410.74.

S'pore Shrs No Rally Till Inflation Eases - UBS

Singapore shares attractively valued but inflationary concerns will continue to weigh on sentiment, says UBS. "Tactically, the market looks oversold, with trailing PE below the Asian financial crisis low," says broker in note. But adds, "fundamentally, we think inflation needs to roll over to end the bear market." Broker says upcoming data on 2Q GDP, June CPI present headwinds; advises investors to seek out stocks with pricing power, strong balance sheets. Says, top Singapore stock picks are DBS, UOB, Keppel Corp. for their pricing power; CMT, Parkway Life, SPH, M1 as yield plays that should be able to weather inflation; CapitaLand as value play

DBSV bullish on Water companies

Rising costs, difficulty in raising capital may have led to 30% year-to-date fall in Singapore's water-related stocks; but growth outlook for these companies remains firmly supported by record orderbooks, buoyant long-term demand, says DBS Vickers. Expects "already robust" orderbooks to continue expanding given companies' substantial exposure to China's buoyant water sector, ongoing venture into other high-growth markets like Middle East, North Africa, India. Says stronger players which can better handle cost increases, obtain funding for new projects will still be able to eke out decent growth, despite rising labor, material costs. Picks Epure($1.07 as fair value) ,Asia Environment($0.64), Hyflux($3.53), Hyflux Water Trust($0.90) as favorites.

Nomura reduces Captialand Fair Value

Nomura lowers target price for CapitaLand to S$5.13 from S$5.32 to reflect lower valuations for subsidiaries; keeps Reduce call. Says, developer, like peers, finds market conditions this year tougher than expected, with weakness in pre-sale market in Singapore affecting planned launches of residential projects. Expects earnings growth to slow in FY09-10 as weaker-than-expected selling prices for key en bloc developments shrink margins. On developer's retail business, house expects increased risks for achievable rents, capitalization rates for its suburban malls, as new supply enters market.

UBS confirms facing further write-downs

UBS on Friday confirmed it faced further heavy write-downs on exposures to troubled US credits, meaning earnings for the second quarter would be "at or slightly below" break even.

Europe's biggest casualty of the US subprime crisis did not quantify its latest write-downs, which analysts have estimated at up to $7.5bn. The Swiss bank said it had continued to make money in wealth and asset management, but suffered renewed losses in investment banking.

UBS said the impact of the latest losses left its Tier 1 capital ratio at about 11.5 per cent One June 30, and stressed it had no need to raise fresh capital.

The bank has raised about SFr30bn ($29bn) in recent months, mainly through a rights issue and sale of shares to strategic investors.

UBS gave an indirect indication of its latest markdowns by noting that its second quarter results would benefit from a tax credit of about SFr3bn in connection with its massive losses to date.

Working backwards, and assuming roughly normal profitability of up to SFr2bn in wealth and asset management combined, that implies a loss of at least SFr5bn in investment banking to produce break-even.

UBS said its latest write-downs had had stemmed from the effect of "further market deterioration" on previously disclosed positions, particularly adjustments to the value of its exposures to monoline insurers.

At the time of its first quarter results, UBS disclosed it had exposures of about $6bn to monoline insurers, a position viewed as ominous by many analysts given the concerns, and subsequent ratings downgrades of many monolines.

The bank also confirmed fears that its problems with subprime, and broader reputational damage, had eroded its until-recently blue chip private banking franchise. UBS said group net new money had been negative in the second quarter, though it did not distinguish between wealth and asset management.

It added that outflows had been most severe in April, but had improved in May and June, especially in wealth management.

The profits warning had been expected, but for July 1, immediately after the end of the second-quarter trading period and in line with the bank's practice in two earlier quarters. Instead, UBS that day released information about important corporate governance changes, but said nothing
about earnings.

UBS officials said Friday's statement represented "voluntary disclosure", in the sense of refining existing guidance to investors, rather than an obligatory announcement triggered by market rules requiring profits warnings when circumstances showed "material differences" compared with previously available information.

Confirmation that the worst is not over yet. UBS may not be the only one. Other US banks will be affected as well.

FM Holdings +7.3% On Planned Indonesia Coal Buy

[Dow Jones] FM Holdings (5GO.SG) +7.3% at 7-month high of S$0.295 as giftware maker's proposed foray into coal business stirs interest in historically illiquid stock. Company looking to acquire 90% stake in TriStar Global Services, which owns concessions to two coal assets in Indonesia. Deal valued at up to S$160 million, but FM hasn't finalized funding structure as it has engaged a technical adviser to conduct due diligence first. But some question wisdom of chasing up share price, noting among other things FM's net profit of just HK$5 million for FY ended March (down 58% on-year). "How are they going to fund it? On top of that, after Dayen's saga, they still want to go into the coal business?" says foreign house dealer, referring to water treatment firm Dayen Environmental's (5BT.SG) recent snag with its own venture into coal mining business. Orderbook suggests stock unlikely to head much higher than session high of S$0.305.

More question raised than answered

CLSA Singapore strategy - Hide

We think 2H outlook will be worse than 1H. The economy will continue to weaken and inflation will continue to pose risks to margins.We expect YoY GDP growth of 3.6% and decelerate to 2.7% in 2009. Neel reckons there will be more consensus downgrades given this typically last for a few quarters and we have only just started.

While we have already downgraded growth expectations over the last two quarters, and are currently forecasting 4.2% and 13.7% earnings growth for 2008 and 2009 respectively. Could see some 2-4% earnings risks in property and O&M. Property risks lie in the overseas operations and cost overruns for O&M.

Neel's strategy is to remain defensive. Our sector O/W are in banks(UOB, OCBC) and telcos (Singtel, Starhub). For conglos, we likeSembMarine and ST Eng. We remain cautious about property especiallyresidential property. We prefer Capitaland and REIT for propertyexposure. We think CPO will be resilient in this environment; GoldenAgri is our top pick here.

Time to go slow. Market is not easy to pick stock now.

Rising Regulatory Risk For Indonesia Coal Co-UBS

Regulatory risk for Indonesian coal producers has increased since thermal coal prices hit US$172/ton last week, with government considering allocating more coal domestically, UBS says in report. "We think the government will implement a Domestic Market Obligation (DMO) policy in order to meet increased domestic coal demand. This is likely to require producers to allocate 30%-35% of production domestically at below market prices. This could create near-term earnings risk and short-term share price weakness." Notes, however, potentially positive outcomes: Indonesian coal consumption growth to pressure supply and export prices (65%-70% of volume sales). Adds, higher domestic volume allocations could mean lower royalties, currently 13.5% of sales, boding well for earnings.

Singapore Coal Plays Fall On European Coal Prices

[Dow Jones] Coal-related stocks in Singapore tumble in response to sharp fall in coal prices in Europe and U.S. Straits Asia Resources down 9.2% while Noble Group down 6.1%. But decline may be mere knee-jerk reaction, as global coal demand remains robust. Local house dealer says weakness may be opportunity to accumulate as industry fundamentals remain positive for sector; "we do not see any easing in the oil prices in the short to medium term. Higher oil prices potentially make coal a more attractive power source." Near-term support for Noble at S$1.93, based on 61.8% retracement of rise to 52-week high of S$2.87 from August 2007 low of S$1.35.

China's Stock Benchmark Falls to 15-Month Low

http://www.bloomberg.com/apps/news?pid=20601084&sid=anfGaEIEFLLc&refer=stocks


This will apply to S-Shares listed on SGX. With a slowdown, many of these shares will be re-rated lower. Yangzijiang will be sold on concerns that new contracts will be hard to get and exisiting contracts will be erroded by rising cost of steel. The company may turn in a lower set of profit.

Many S-Shares listed are manufacturing companies and will be affected by the manufacturing slowdown.

STI Flat Midday; Best To Exit Market - Broker

[Dow Jones] Singapore shares fail to make headway as investors remain sidelined amid lack of leads, with STI off just 0.04% at 2946.25 midday after drifting in tight 2940-2960 band in morning session; any further downside expected to be capped at 2900, with session high possibly capping gains. "The current bear trend may get some respite, even if it may be a brief one," says Kim Eng Securities, citing favorable technical indicators. But adds, any rebound in near term should be viewed as temporary technical counter trend rally, noting no reason to "paint a bullish picture" for time being; "for investors who failed to exit the market over the past few weeks, the market may now open up new opportunities to exit." Market volume remains anemic, with about 2 decliners for every gainer. Yangzijiang (BS6.SG) most active on SGX and top percentage decliner among STI stocks; off 2.4% at S$0.83 with 14.6 million shares traded, as margin erosion concerns due to high steel prices continue to weigh.


Any respite is likely to be a brief one, with the Dow Jones looking like it will head further south in the next couple of weeks.

Chart for Indo Agri and Wilmar

Indofood Agri +3.1%; Wed Selloff Overdone - DMG

[Dow Jones] Indofood Agri Resources (5JS.SG) +3.1% at S$2.66, recovering part of Wednesday's 10.1% tumble, as bargain hunters swoop in. DMG, which has Buy call with S$3.34 target, says earlier selloff due to higher Indonesia CPO export tax levy and weaker Malaysian CPO exports data, not warranted as macro outlook remains positive; "we believe that IFAR will continue to enjoy the present conducive environment, especially with its high ratio of mature acreage." But thin volume suggests investors still watchful of potentially more negative surprises, indicating this week's highest close of S$2.87 unlikely to be disturbed.

On the chart, there is a bearish divergence, likely we have seen a short term high and more correction in store in the coming days for Indo Agri. In fact Wilmar and First Resources are also exhibiting this same scenario. Only Golden Agri among the CPO stocks is spared this scenario.

End of decline for China Stock?

China Life Insurance Co. has been snapping up ``large quantities'' of open-end stock funds, a move that signals the end of China's equity market slump, the China Securities Journal reported, citing unidentified people.

Chinese insurers have been following China Life's lead in buying index-linked funds, boosting optimism that Shanghai's key Composite Index may rebound at about 2,800 points, the state-owned newspaper said, citing analysts without naming them. The move by China Life, the country's largest insurer, is significant because of its bellwether size and its influence in the industry, especially its tendency to ndertake large-scale purchases, the newspaper said.

Sales of China's stock funds may be bolstered, reversing an equity market slump that had limited the new funds this year to 1 billion yuan ($145.6 million) each, the newspaper said.


Just support from the government to pop up the stock market?

Outlook For S-REITs Bleak As Inflation Weighs -KE

Singapore REITs may face strong headwinds amid steepening Singapore bond yield curve, potential risks of higher interest rates, says Kim Eng Securities. Notes 10-year bond yield has spiked more than 100 basis points to 3.5% in past two weeks - fastest pace in 26 years - on inflation fears (Singapore's May CPI reading at 7.5%); "the issue here is that S-REITs will face difficulties in securing long-term funding to fund their acquisition growth and/or refinance short-term borrowings." Says current yield spread between S-REITs and 10-year SGD bonds has narrowed to under 200 basis points (below historical average), making REITs unattractive. FTSE ST Real Estate Investment Trust Index off 0.7% at 735.15

CIMB Turns Tad Cautious On Asia Palm Oil Sector

Asian plantation sector is still good bet but a potential crude oil price pullback is a worry, says CIMB. Broker says crude palm oil (CPO) price well supported by strong fundamentals, remains optimistic on sector, but is "turning a bit cautious owing to concerns over a potential correction in crude oil price." Says major unwinding of funds out of commodities, global recession could put crude oil price under pressure; CPO price closely linked to fate of crude oil price. Makes no change to big-cap picks, which remain Wilmar (F34.SG), IOI Corp. (1961.KU), Astra Agro (AALI.JK). Among the mid-cap planters, broker prefers Asiatic (2291.KU), Indofood Agri (5JS.SG), Sampoerna Agro (SGRO.JK). Of the Singapore-listed stocks, Wilmar currently +1.2% at S$5.15, Indofood Agri +1.8% at S$2.83.

STI Down 1.3%, 2950 Support; Outlook Choppy-CIMB

STI down 1.3% at 2962.37, its lowest level since March 27 as Wall Street's Friday selloff on oil, financial sector jitters spills over into regional markets; support for STI tipped at 2950. CIMB says near-term outlook remains choppy; "unless the flow of negative news flow reverses this week, it looks like it will be another testing week for holders of equities." Majority of blue chips lower with particular weakness in property heavyweights; CapitaLand (C31.SG) down 3.0% at S$5.90, Keppel Land (K17.SG) down 2.7% at S$5.06. Broad market volume thin; losers outnumber gainers 196 to 53.

Wilmar up news of plantation purchase

Reuters) - Wilmar International, the world''s largest listed palm oil trader, rose as much as 2.6 percent to hit a one-week high on news that it will buy an edible oil business of Unilever in Africa. TheAnglo-Dutch consumer goods group said on Thursday that it has agreed to sell its edible oil business in the Ivory Coast to SIFCA and a 50:50 joint venture between SIFCA and two Singapore-based companies, Wilmar International and Olam International .

Credit Suisse and Goldman Sachs also issued bullish research reports on the Asian palm oil sector, helping Wilmar jump to S$5.22, with over 2 million shares changing hands. In its report, Goldman Sachshighlighted Wilmar as one of its top picks for its strong long-term growth potential, saying palm oil prices could rise further. "Current crude palm oil prices are ndervalued relative to crude oil and soybean oil," the bank said. CreditSuisse noted that exports of malaysian palm oil to the U.S. have increased significantly since the trans-fat labelling legislation in 2004, and that it remains bullish on palm oil prices.

"Wilmar should be a core holding for long-term investors a it offers high-quality, high-growth exposure to the palm oil sector given market leadership in its downstream businesses and strong organic growth potential," said Goldman Sachs which has a "buy" rating on Wilmar with a target price of S$6 a share.

Indofood Agri To Buy Sugar Plantation Co Stake For S$56M

Indofood Agri Resources Ltd said Friday that it is buying a 60% stake in a sugar plantation company in Indonesia for about S$56 million.

The company, PT Lajuperdana Indah, currently owns a sugar cane plantation in South Sumatra, Indofood said in a statement.

Indofood is the Singapore-based unit of the world's largest instant noodle maker, Indonesia's PT Indofood Sukses Makmur.

Source Dow Jones Newswires

JP Morgan postive on CPO

In our view, crude palm oil (CPO) prices are undervalued relative to crude oiland soybean oil, and we expect some convergence going forward. Over the last 2 months, crude oil and soybean oil prices have risen 17% and 7%,respectively, while CPO prices have gained 1%. Over this period, CPO’s price discount to soybean oil has widened from 24% to 28%. We see more upside potential for CPO prices over the next 3-6 months on higher CPO biodiesel demand, potentially higher soybean prices and a narrowing price discount to soybean oil. We maintain our positive view on the plantations sector.


Watch Indo Agri, Wilmar, Golden Agri and First Resources.

STI +0.3% On US Cue; May Rebound To 3100-Chartist

Singapore shares heading higher in early trade as better Wall Street lead sparks some buying interest; STI +0.3% at 3002.29, off earlier high of 3012.34, with resistance tipped at 10-day moving average of 3027. Several blue chips seeing good gains; best performers are CapitaLand (C31.SG) +2.6% at S$5.88, NOL (N03.SG) +2.8% at S$3.36. Technical analyst at local house tips market to head higher in near-term; "I think we will rebound to 3100 on the back of a rebound in the Dow, before we come back and test recent lows." But thin volumes and move off early highs suggest today's upside may be limited; gainers outnumber losers 121 to 84 in broad market.

Play still on resources. Noble, Olam and CPO counters.

STOCK CALL: JPMorgan downgrades Synear Food (Z75.SG) to Underweight from Overweight, cuts target price to S$0.35 from S$1.30. Broker says the frozen food maker is likely to continue to face margin pressure due to loss of market share to major rival Sanquan and rising advertising, labor costs; warns "the downside risk from these has yet to be built into the market consensus." Cuts FY08, FY09, FY10 earnings estimates by 13%, 24%, 23%, respectively. Says big target price cut reflects move to different valuation method, now uses P/E rather than DCF approach, new target implies forward P/E of 7X. Share down 6.0% at S$0.47.

Target price of 0.35 is lower than current price. Expects futher downside pressure. At 0.35, the P/E is 7X which is higher than most S-share issue.

STI Off 1.8%; Extends Fall, US Futures Bearish

Singapore shares head lower at start of afternoon session as bearish lead from pre-market Dow futures adds to already subdued mood; STI down 1.8% at 2984.45, nearing support at last week's intraday low of 2979, lowest level since March 27. AmFraser senior VP of research Najeeb Jarhom tips index to find buying support soon; "the STI should be able to hold around 2970-80, traders with a month-end/midyear window dressing view, as well as 2Q reporting season in mind and who do not expect a repeat of the 1Q series of plunges should begin to accumulate below 3000." Broad market volume remains thin; losers outnumber gainers 3 to 1.

STI +0.5%; China, Commodity Plays Up; 3056 Cap

Singapore shares holding onto gains at start of afternoon session as China market rally lifts mood, pre-market Dow futures give bullish lead; STI +0.5% at 3044.33 with resistance tipped at 10-day moving average of 3056. But marketwatchers remain cautious of calling breakout rally; "our short-term view is still that the market is rangebound between 2800-3200," says UOB-KayHian research head Nancy Wei. S-chips rallying, FTSE ST China index +3.4% at 453.16; commodity plays also doing well on continued optimism that commodities offer bright spot amid wider economic uncertainty, Olam (O32.SG) +6.6% at S$2.75, Noble (N21.SG) +4.4% at S$2.35

Singapore Complex Refining Margins Fall To 5-Week Low-Merrill

Singapore complex refining margins fell to a five-week low, suggesting fading regional demand and a pickup in supply continue to weigh on most oil products in the region, a report by Merrill Lynch showed Tuesday.

Complex refining margins in Singapore fell by $1.61 to $12.52 a barrel in the week ended June 13, while simple refining margins were down $1.95 at minus $8.36 a barrel, the lowest in at least 18 months. The weakness in simple margins was due mainly to softer fuel oil, whose refining margin hit a fresh record low of minus $31.48 a barrel.

Middle distillates' spot margins also narrowed due to rising regional supply with the maintenance season coming to an end. But gasoil margins were still the best among all products, partly because "strong near term demand from China and Australia are keeping prices on the boil", the report said. Gasoil's refining margins slipped by $1.37 to $39.47 a barrel, while jet kerosene's margins were down $1.88 at $38.22 a barrel.

Gasoline's margins remained strong, though down for the third straight week, largely because China, the largest exporter of gasoline in the region, has become a net importer since May due to continuous domestic shortages. Gasoline spot margins were down $1.84 at $13.34 a barrel.


Bad news for SPC. With a drop in refining margin, SPC bottom line could be hit as well.


Crude Oil price may be heading towards record high but if there is a real demand for oil, shouldnt there be strong demand to refine the products? The rise in Crude Oil could in a large part be due to speculation!

US Flood Damage Positive For Palm Oil Price -CS

Flood damage for corn and soya crops in U.S. midwest is good news for crude palm oil (CPO) prices, says Credit Suisse. "The crop damage in the U.S. could become a big positive catalyst for oilseed and vegetable oil prices," says broker. Notes U.S. is world's largest producer of corn and soya, too late to replant corn crop that has been destroyed. Adds, continued strength in crude oil prices, falling vegetable oils stock-to-use ratio, strikes in Argentina hitting soybean exports also positive for CPO prices. But says rising Malaysian palm oil inventories is a potential negative. Maintains Overweight call on Asian palm oil sector with Indofood Agri (5JS.SG) a top pick; rates Outperform with S$3.40 target. Indofood Agri shares closed +2.1% at S$2.42 yesterday.


Bad for
Corn - China Sun, Luzhou
Soya - Celestial, Pine Agritech

STX PO Outlook

STX Pan Ocean (V33.SG) reverses early gains, heads lower as worries over outlook for shipping rates weigh; share down 4.4% at S$2.61. Korean-listed shares (028670.SE) down 5.0% at KRW1,980. Stock had earlier shrugged off continued slump in Baltic Dry Index (BDI) as investors appeared to have taken view that weaker shipping rates priced in, but share now in negative territory, suggests some investors worried that BDI could continue to tumble, putting stock under pressure. "STX Pan Ocean's share price is a mirror image of the BDI, it's a trading stock and there's no point trying to bottom fish it when the BDI is going to keep falling; it's like trying to catch a falling knife," says analyst at local house. Foreign house analyst says parent STX Corp.'s (011810.SE) plan to issue 5.39 million common shares to raise KRW307.84 billion not impacting STX Pan Ocean share. Singapore share now below support at S$2.68 (78.6% Fibonacci retracement of rise from March 20 low of S$2.32 to May 20 high of S$4.00) with next key support tipped at March 20 low of S$2.32.

UOBKH 2H08 Strategy

UOBKH Singapore 2H08 Strategy: Staying Ahead Of Inflation
We are facing a difficult environment of slowing economic growth and rising inflation on the back of high commodity prices.

l The best thematics are companies with strong pricing power or those that can grow their revenue faster than rising costs. There include plantation and upstream oil & gas-related companies. Selected REITs will benefit from rental reversions in 2008-09. Rising interest rates, coupled with a strong loan growth, will be positive for banks. S-chip companies that have a strong brand name and are seeing strong domestic demand should stay ahead of inflation. On the flip side, we are negative on the aviation sector and neutral on traditional defensive/yield stocks whose cost increase will likely outpace their revenue growth.

l On value picks, property developers are deep in value following a sharp price decline since 3Q07. Share prices should be supported by their worst-case RNAVs despite negative sentiments in the physical market throughout 2008.

l The FSSTI will likely be range-bound in the 2,800-3,200 region in the short term. A new low is not envisaged at this stage. Our 12-month bottom-up FSSTI target is 3,630. The market's 2008 PE of 13.6x is at the bottom of its long-term historical PE band and FSSTI’s P/B of 1.70x is below Asia ex Japan's average of 2.3x. FSSTI's core EPS growth is forecast to contract 2.6% in 2008 before rebounding to a growth of 12.6% in 2009. We are OVERWEIGHT on the Singapore stock market.

Top BUYs: DBS, OCBC, SembCorp Marine, AusGroup, ASL Marine, First Resources, Indofood Agri Resources, City Developments, Ho Bee, A-REIT, CCT, Parkway Life REIT, China Hongxing, China Sports.

Top SELL: SIA

Another downgrade for STX PO

[Dow Jones] STX Pan Ocean (V33.SG) continues to slump as investors fret dry bulk shipping rates are set for seasonal weakness; share down 8.3% at S$2.77. "Our short-term positive view on rates is drawing to a close, as the spring fling gives way to the summer slump," says Goldman Sachs. Broker notes iron ore negotiations are key to timing, magnitude of shipping rate correction; says if negotiations are delayed further, shipping rates likely to correct soon, and more sharply than market expects. Advises investors to sell dry bulk shippers into strength; maintains Neutral rating on STX Pan Ocean with S$2.50 target price. Next support tipped at S$2.68 (78.6% Fibonacci retracement of rise from March 20 low of S$2.32 to May 20 high of S$4.00. Korean listing (028670.SE) down 9.2% at KRW2,070.

STX Pan Ocean Off 5.9%; S$2.82 N/T Support

STX Pan Ocean (V33.SG) down 5.9% at 2-month low of S$3.06, hurt by 2.7% fall in BDI, overall market weakness. But rebound off morning low of S$2.95 suggests bargain hunting or short-covering at work, although unlikely to help push share price into positive territory. On charts, technical indicators looking bearish, with Direction Momentum Indicator on ADX recently triggering Sell signal, while RSI still heading south but yet to reach oversold region. Near-term support at S$2.82, based on 61.8% retracement of rise to May high of S$4.00 from Jan. 22 low of S$2.09.


STOCK CALL: Credit Suisse keeps STX Pan Ocean (V33.SG) at Neutral with S$3.75 target price. Says lead indicator Baltic Dry Index (BDI) has only fallen back slightly so far but tips index to head lower in near-term due to seasonal weakness, reduced iron ore cargo as a result of China's stockpiling. Says shares in dry bulk shippers have corrected as worries priced in, but could still go lower; "we think there is still downside share price risk in the short-term on BDI weakness and thus it is too early to pick them up." Share down 6.2% at S$3.05 vs FTSE ST All Share down 1.7%. Korean-listed share (028670.SE) closed down 7.3% at KRW2,280.

OIR Property Sector Outlook

Outlook in the property sector still remains uncertain. Whileproperty price index has remained resilient, the lack of transactionvolume, low take-up rate and delay in launches by developers raised moreconcerns about a deteriorating property market. Historically, lower priceswould follow after a period of sharp decline in volume and the expectationof slower rental rates growth provide an additional catalyst to dampenproperty prices going forward. In particular, we see the high-endproperties at greater risk to further price corrections, as there is stilla substantial pipeline of projects waiting to be launched. Mass marketsegment was weak in 1Q08, most probably due to fears of oversupply afterdevelopers rushed to launch their mass market projects during the period.Going forward, pipeline of mass market launches appear limited and thisshould ease concerns of oversupply and drive take-up rate higher. Wereiterate our NEUTRAL view on the Singapore residential property sector asour expectation of price weakness in the high end and price stability inthe mid to mass market properties remain unchanged. Thus, we remaincautious over developers that have large land bank exposure in the high endmarket, like CapitaLand and Keppel Land. We are currently reviewing ourcalls on CapitaLand, City Developments, Keppel Land and UOL Group due to achange in analyst coverage.

In the STimes today, there is a report of new launches being priced 10% lower. Could this be the start of more to come?

STI Down 1.6%; Breaks Below Key 3000 Support

Singapore shares following Wall Street lead, sharply lower in early trade as resurgent inflationary, credit crunch fears grip investors; STI down 1.6% at 2997.66, goes below 3000 for first time since April 1, next support tipped at 2950. "Sell in May and go away looked like the right call, people are panic selling and there are no buyers around to support the market," says strategist at local house. Most blue chips in negative territory with property stocks particularly weak, likely on renewed global economic jitters; Hongkong Land (H78.SG) worst performer, down 4.9% at US$4.44. Broad market volume slightly above yesterday's but still low by normal standards, losers outnumber gainers roughly 5 to 1

DJ MARKET TALK: ABN Amro Starts China Milk At Buy; S$1.10 Target

STOCK CALL: ABN Amro initiates China Milk (G86.SG) at Buy, sets S$1.10 target price. Broker says raw milk, bull semen producer is good play on rising food prices in Asia with rising disposable incomes in China driving demand for dairy products. "China Milk is an excellent play on the Chinese food theme: it is the largest company in China in the bull semen, cow embryo and raw milk businesses, in terms of market share." Adds valuation undemanding, stock trading at steep discount to Asian agricultural peers. Share currently up 6.2% in active trade at 2-week high of S$0.775.

STI +0.6%, Still In Tight Band; 3200 Resistance

[Dow Jones] Singapore stocks manage to cling on to gains, but upside appears limited as market still unable to shrug off recent sluggish tone, judging from thin volume. STI +0.6% at 3163.75 midday after drifting in tight 3162-3184 band for whole morning. Resistance remains at 3200. "It's very rangebound. There's no incentive. The market is looking for direction but there's not much," says trader at bank-backed brokerage. FTSE ST All Share Index +0.6% at 807.31. New listing China Taisan Technology (F2X.SG) most active on SGX with 54.3 million shares traded, +2.1% at S$0.245.

Lehman Downgrades STX Pan Ocean To Underweight

Dow Jones] STOCK CALL: Lehman Brothers downgrades STX Pan Ocean (V33.SG) to Underweight from Equalweight, citing limited upside to reduced target price of S$3.10 vs S$4.00 previously. New target, based on sum-of-parts valuation, assumes fleet value multiple of 1.3X vs 1.5X earlier. Says larger-than-expected supply imbalance in dry bulk shipping industry likely to drag down sector-wide freight rates, earnings from 2009, hence hurting STX. Expects share price to remain volatile in near term due to seasonally weak BDI, with upside expected during seasonal end-3Q BDI bounce. Stock off 0.8% at S$3.64. Korean listing (028670.SE) closed down 0.6% at KRW2,680

Olam Off 7.0%; Confirms Dairy Farmers Interest

Olam (O32.SG) shares heading lower as convertible bond issue, news of potential M&A unsettles investors; stock down 7.0% at S$2.77 with support tipped at S$2.60 (May 26 low). Commodities player confirms it is mulling bid for Australian branded dairy business Dairy Farmers; CFO says on conference call, "our M&A team is having a look at it, but no formal bid has been made by us." Analysts estimate Dairy Farmers could fetch up to A$900 million, with rising commodity prices generating lots of interest in the takeover target. CFO also confirms that company has submitted bid for assets of Ivory Coast Cotton producer La Compagnie Cotonniere Ivoirienne, with Ivory Coast newspaper Fraternite Matin reporting assets worth around US$19 million. While investors may like that company is keen to expand its footprint as it rides the soft commodities boom, moves being overshadowed at present by worries over dilution from fund raising, execution risks.

STI May Open Up But Retreat Later On Short Sales

Dow Jones] Singapore stocks may repeat Wednesday's pattern of opening higher, aided up further pullback in oil prices, and giving up gains later in day, as Wall Street's mixed performance overnight not expected to offer any clear direction for investors. Market volume likely to remain thin as players lie low given lack of leads. "I think nothing much is going to happen. People are shorting at every available opportunity. The market is more inclined towards short positions," says local house trader. Immediate support for STI at 3100, resistance at 3180; closed down 0.6% at 3134.80 yesterday.

Phillip Sec Raises Sinopipe Target To S$0.60

Phillip Securities raises Sinopipe Holdings (X06.SG) target price to S$0.60 from S$0.575; reiterates Buy call. Broker says target price upgrade reflects recent win of CNY660 million build-transfer-operate piping and infrastructure contract. Says contract win was much larger than expected, outlook promising, "significant further earnings growth looms." Says stock looks attractive with cheap valuation, trades at FY08 P/E of only 5.5X due to rapid forecast earnings growth. Adds revised target price only factors in phase 1 of the contract as details for phases 2 and 3 are yet to be announced. Shares currently down 1.2% at S$0.405.

Mid Day Market Update

[Dow Jones] Singapore blue chips may close tad higher as bargain hunters nibble away amid pullback in oil prices. STI now +0.5% at 3169.15, with most components higher, but any further gains likely to meet resistance at 3200 as leads few. "The office is so damned quiet, I'm almost falling asleep," local dealer says of his house's trading desk. Shares in broader market also tad firmer, with FTSE ST All Share Index +0.4% at 808.31. Still, thin market volume suggests investors generally sitting out session.

Cosco Corp May Be Surprise Petrobras Winner -CS

[Dow Jones] STOCK CALL: Cosco Corp. (F83.SG) may emerge as the
surprise winner of Petrobras (PBE.BA) rig boom despite Keppel Corp.
(BN4.SG) being the first yard to win one of Petrobras 12 rig charters, says
Credit Suisse. Broker says Norwegian driller Sevan (SEVAN.OS), tapped for a
Petrobras charter, has 2 newbuild options with Cosco; "Sevan is already
contracted to Petrobras and Petrobras has awarded a second semi-sub charter
contract to Sevan. It would not surprise us if Sevan were to use its option
with Cosco for the construction of the new semi-sub." Broker tips Cosco to
secure at least one, if not two contracts, conservatively worth US$170
million apiece. Maintains Outperform rating, S$4.40 target price. Share
+0.6% at S$3.36.

If Cosco were to win these contracts, it would be a huge boost to its share price. Keep an eye out for the news and results

Wilmar falls after UBS downgrade

Wilmar International fell as much as 3.9 percent after UBS
downgraded its rating for the palm oil firm to "neutral"
from "buy", citing a lack of short-term upside to its share price.
Wilmar, the world's largest palm oil trader, hit an intraday
low of S$5.20 with over 1.8 million shares traded.
UBS analyst Alain Lai said in a broker note Wilmar's share
price is fairly valued after it rose 52 percent from a low of
S$3.60 on March 18.

But he raised the plantation firm''s price target to S$5.90
from S$4.55, citing long-term exposure to a surging Chinese
oilseed and edible oil demand.

"We think there is strong upside to Chinese edible oil and
soybean demand. Wilmar''s 20-25 percent marke share of the
Chinese soybean crushing market and 40 percent share of palm oil
refining capacity imply it is best positioned to benefit," Lai
said.

Potential currency devaluation in Vietnam - Keppel Land

Vietnam’s inflation rate soared to 25% in May, the highest since 1992. There are rising concerns that this may result in a financial crisis and the Vietnamese currency, the dong, could see a hefty devaluation. There are talks that Vietnam’s currency crisis could rival Thailand’s currency crisis in 1997. We have examined Singapore stocks in our coverage and there are four stocks that significant business presence in Vietnam. They are Keppel Land, Ascot Residence Trust, Low Keng Huat and SembCorp Industries.

Singapore Property Developers
Singapore property developers have ventured into Vietnam across all major property segments that include residential, office, retail, hotel and serviced residences. The table below provides the exposure of the property developers under our coverage. Keppel Land is the most exposed to Vietnam drawing 19% of its gross RNAV from Vietnam. The exposure of other property developers is quite small and limited up to 3% of their gross RNAV.

Keppel Land
We understand from Keppel Land management that the company does not borrow funds for its Vietnamese projects locally due to the high funding costs involved (around 12-15% levels). Instead it follows the approach of group borrowing mainly in S$ at relatively low interest rates (blended borrowing rate around 3.2% as at 1Q08) to fund the needs of its various subdivisions. This approach however is prone to risks associated with a severe devaluation of the Vietnamese currency.
We further understand that prices and rentals are quoted in US$ but the collection is done in Vietnamese Dong offering some protection against currency fluctuations. However, in the event of a severe devaluation of the Vietnamese Dong, the affordability constraints will pose a downward pressure on the prices and rentals.

Mid Day Market Update

Singapore stock market bogged down by investor inertia as Wall Street's overnight fall crimps appetite, keeping players sidelined until firm catalysts emerge. STI down 1.2% at 3150.83 midday after drifting in tight 19-point band for entire morning. Immediate support tipped at 3140, followed by 3100. AmFraser Securities' Najeeb Jarhom says upside for STI in near term may be capped at 3200 as investors expected to take profits around that level after accumulating at 3100; "this pattern may continue throughout much of this holiday and soccer-filled month while waiting for another round of window-dressing at end-June." UEFA Euro 2008 kicks off June 7. Overall market volume thin, with only 566.7 million shares traded. FTSE ST All Share Index off 1.0% at 803.58

DJ MARKET TALK: Goldman Cuts SPC Target To S$8.65 From S$9.20

STOCK CALL: Goldman Sachs cuts Singapore Petroleum (S99.SG) target price to S$8.65 from S$9.20; maintains Buy rating. Broker says new refinery capacity coming on stream is likely to depress refining margins; "we believe that Reliance Petroleum's new refinery, representing almost 50% of our estimate of global oil demand growth in 2009, is likely to have ramifications for refining margins globally." Broker adds gasoline spreads likely to be particularly affected as Reliance's gasoline and diesel output expected to be entirely exported out. Cuts FY08, FY09 earnings estimates by 15.8%, 23.4%, respectively to account for lower assumed refining margins, which leads to lower earnings target price. But says Singapore Petroleum remains one of broker's preferred oil refining plays globally with stock still on conviction Buy list. Share closed down 1.6% at S$6.79 yesterday

Ripples from a potential Vietnam meltdown

CIMB-Singapore Strategy
Investors have been concerned about exposure to Vietnam among major Singapore stocks recently. This is especially so after Vietnam’s inflation rate galloped to +25% recently and the dong’s 12-month forward rates weakened suddenly last week. We profile Singapore stocks with major exposure to Vietnam. A few property stocks are more vulnerable than others, namely ART, F&N and KepLand. Most of the other sectors have limited exposure. Two of the three banks in Singapore also bought 10% stakes in Vietnamese banks not too long ago but contributions are very small. The other stock with some exposure is Olam. Maintain Neutral on the Singapore market with an unchanged STI target of 3,480 for end-2008

DJ MARKET TALK: Take Profits On Wilmar, Straits Asia -DBS Vickers

[Dow Jones] Investors should consider booking gains in some Singapore palm oil and commodity plays after their recent run up, says DBS Vickers strategist Yeo Kee Yan. Broker says plantation stock Wilmar (F34.SG) is now trading close to fair value, advises investors to exit stock. Adds, First Resources (EB5.SG) is preferred Singapore palm oil play as valuation still looks very attractive. Strategist says coal miner Straits Asia Resources (AJ1.SG) also now looking stretched with stock trading above fair value, suggests investors book profits. Wilmar down 2.0% at S$5.45, First Resources +3.4% at S$1.21, Straits Asia +1.2% at S$4.14.

Genting Intl

(Bloomberg) -- Genting International Plc, owner of
the biggest U.K. casino operator, rose the most in six months in
Singapore trading after announcing a venture with Mark Burnett
International Inc. that will develop game shows and reality
programs in Asian countries.
Genting gained 2.5 Singapore cents, or 4.1 percent, to 63.5
cents as of 11:10 a.m., rising the most since Nov. 30. The stock
is headed for its highest close since Feb. 15. Genting shares
have fallen 6.6 percent this year, compared with the 7.7 percent
decline in the benchmark Straits Times Index.
The 50-50 venture, called Mark Burnett Productions Asia Pte
Ltd., will use the facilities and attractions at Resorts World
at Sentosa, an integrated resort being built by a unit of
Genting, for some of its productions.
Mark Burnett produces the reality-television shows,
``Survivor'', ``The Apprentice'' and ``Contender.''
Genting International is a unit of Genting Bhd., Asia's
biggest publicly traded casino operator.

Singapore Hot Stocks-Genting Int''l soars to 5-mth high

Genting International rose as much as 10.7 percent to a five month high of S$0.675 withover 81 million shares traded, with some dealers citing eased concerns over construction costs for a Singapore casino. Malaysian parent Genting Bhd posted on Thursday a less-than-feared fall in first-quarter earnings.

"The belief is that the development of casino cost over-runs is no longer a concern," a Singapore based dealer said. Sister company Star Cruises gained as high as 8.9 percent to S$0.245 with more than 13 million shares changing hands. Genting International is building a casino at a cost of up to S$6 billion ($4.4 billion), about S$800 million or 15 percent above its initial budget, due mainly to higher construction expenses.

Last month, Genting''s Chairman and CEO told Reuters he does not expect further increases in cost for the casino. "The construction progress at Resorts World at Sentosa is on schedule at the revised budgeted costs of S$6 billion and all the funding for the project has been secured," Kim Eng Securities said in a broker note.

STI +0.1%; Reverses Early Loss, Nears 3200

Singapore shares erase early losses to move slightly higher in early trade; STI up 0.1% at 3197.05 vs session low of 3182.14 with immediate resistance tipped at 3200. Index bucking falls for other regional markets as bank heavyweights head higher, but CIMB says charts tip capped upside; "with its indicators showing mixed signals, we do not think that the current rebound would be strong." Support tipped close to 10-day moving average at 3160 if index heads into negative territory again. Broad market volume thin, similar to last week''s levels, with losers just outnumbering gainers 119 to 113.

China XLX Off 6.5% On MS Downgrade; S$0.83 Floor

China XLX Fertiliser (B9R.SG) down 6.5% at S$0.865 in active trade, extending morning''s fall, as Morgan Stanley''s downgrade to Underweight from Overweight, cut in target price to S$0.75 from S$1.61 due to margin concerns raises selling pressure. Chart action signals bearish outlook in near term, as positive direction momentum indicator on ADX has slipped below negative indicator and MACD has issued Sell signal. Immediate support at S$0.83 (38.2% retracement of rise to May high of S$1.06 from 52-week low of S$0.465).

Sinotel Tech +17.6% On Hopes Of China 3G Business

Sinotel Technologies (D3W.SG) +17.6% at S$0.30, off high of S$0.32, on strong volume as traders bet wireless telecom services provider will benefit from China''s push to roll out 3G services. Beijing this week urged country''s phone companies to merge into three large groups in bid to restructure industry, and said 3G licenses will be awarded once mergers completed. Move expected to result in huge new orders for telecom equipment suppliers. "The China government wants 3G to be up before Aug. 8, so Sinotel is a key beneficiary," says local house trader. Sinotel spokesman says "there isn''t anything that the management is aware of" driving share gains, but notes investors may be chasing up stock because of China''s restructuring; "I do believe that, to a certain degree, this could be an implication because of the recent announcement from the (China) telco sector." Near-term resistance at S$0.34 (April 28 high).

Ezra +4%; DBS Ups Stake; May Hit S$3.27 - KE

[Dow Jones] Ezra (5DN.SG) +4.0% at more than 4-month high of S$3.09, clearing S$3.00 for first time since mid-January, as interest possibly triggered by recent news of substantial shareholder DBS (D05.SG) raising stake in company. According to SGX filings, DBS now owns deemed stake of 7.01% vs 6.94% previously in offshore support vessel owner. Ezra''s April announcement of S$0.05/share special dividend payout, due June 18, possibly also underpinning stock''s recent resilience. Kim Eng Securities says formation of reverse head-and-shoulders pattern on charts sets stage for stock to head higher, with technical target at S$3.27.

STI +2; Blue Chips Mixed; Oil Plays Retreat

Singapore shares slightly higher in early trade taking cue from Wall Street, Nikkei, but slim lead suggests shares may drift into negative territory; STI +0.2% at 3167.35 with resistance tipped close to 30-day moving average at 3180, support at 3150. "It''s very quiet on the trading floor, nobody is taking fresh positions," says trader at local brokerage. Blue chips mixed with weakness among rigbuilders after oil price pulled back; Keppel Corp. (BN4.SG) down 0.5% at S$12.12, SembMarine (S51.SG) down 0.4% at S$4.58. Broad market volume fairy thin with gainers outnumbering losers 146 to 88.

Some profit taking in counters that have run up. Players closing position ahead of the weekend.