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.

Palm Oil Stocks

UOBKH starts coverage of 3 palm oil stocks, First Res, Golden Agri and Indo Agri as Buy. More information is available from Regional Report which can be found at the Research section of your online trading platform.

SINGAPORE: Investors have been cautious about the property sector amid expectations that the muted residential property market will weaken further. However, some property consultants are taking a slightly more positive stance, saying that this situation is temporary.

Transaction volumes for private homes have been thin, with developers holding back launches or cutting prices. And recently, there have been a slew of bearish reports from the likes of JP Morgan and Nomura, which are further dampening sentiment. They said that private home prices could drop by as much as 35 per cent in the upper-end segments of the private residential property market by 2010 due to excess supply and poor sentiment. They argue that marginal speculative sellers are likely to drive prices lower amid low transaction volumes and higher unsold pre-sale inventories. Lower rental expectations and a large increase in supply are also seen compounding the situation in the longer term. Some also said the middle and low-end segments will not be spared.

But there are some property consultants who said that while things are slow now, dynamics will change going forward. While the consensus view is that prices will continue to remain under pressure for the rest of the year and into 2009, some consultants said that the main reasons for falling prices are external.

Chua Chor Hoon, Senior Director, Research, DTZ Debenham Tie Leung, said: "It's mainly the external factor, because of what's happening in US, so sentiments are really weak now. "(It's also) partly because prices have gone up quite a lot last year - especially after the deferred payment scheme has been removed that made buyers more cautious. It's a combination of factors, but I believe it's the US economy that has a greater impact." She believes that prices will continue falling for the rest of this year and even into the year ahead, but a glimmer of hope exists. Ms Chua said: "Prices are likely to fall for the rest of this year and they could continue to fall next year depending on how the US economy pans out. "But we have a lot of good things coming up in 2010 - Youth Olympics, integrated resorts. So our fundamentals are quite strong. When the US economy picks up, I believe sentiments will follow suit."

And some point out that the bearish reports are due to an over-estimation of supply numbers. Ku Swee Yong, Director, Marketing & Business Development, Savills (Singapore), said: "The differences arose because of variance in the interpretation of a very basic set of data - the supply numbers - how many apartments will be completed in the next three years. "We believe that the supply numbers have been overstated because there have been many projects filed and we know that these projects have been delayed." What is clear though is that shares in property developers have been taking a hit amid concerns over the property outlook. Most of them closed lower on Wednesday. - CNA

My Opinion
Most of the foreign firm analysts are bearish on the property sector, while those who are bullish on the property market tends to be local Singaporean. JPM, CS and Barclays are among the most bearish. Local brokering houses and property firms tends to be more bullish.

It should be noted in the past year, most of the high end buyers of property, close to half tend to be foreigners. With property price in the States falling and with the lower US$, these buyers will tend to move out of Singapore into other countries, especially the US. High end prices will suffer the most.

Those that tend to be bullish are hedging their bets on the US economy recovering. What if the US economy do not recover by the end of the year. Others are hopeful that IR or Youth Olympics, would boost demand in 2010. By then there may be many new apartments on sale or there could even be an oversupply!

Many property counters on the SGX has fallen badly in price. If property is not bearish, Allgreen, Ho Bee, just to name a few, would not have fallen that much. Those that have not fallen that much owes their overseas property arm a great favour. Even the S-shares property counters have performed badly. With inflation going higher, you can expect interest rate in China to head higher after the Olympics. This is not good news for China property play.

I think it is not time yet to accumulate property counters.

Tat Hong Trading At Very Cheap Valuation - Citi

STOCK CALL: Tat Hong (T03.SG) is trading at very cheap valuations after falling 34% year-to-date, underperforming STI''s 9% year-to-date fall, Citigroup says. "Tat Hong is trading at 11X CY08E PER, close to the industry''s 10X, which we think is unjustified given Tat Hong''s superior earnings growth, scale of operations, experienced management, and clearly outlined growth strategy." Keeps at Buy, raises target price to S$3.25 from S$3.15. Raises FY09E-FY10E estimates by 6%-8% to take into account higher associate contributions and better-than-expected FY08 results; FY08 recurring net profit +83% at S$85 million. "On the back of tight supply of heavy equipment from manufacturers, along with healthy demand from customers, the group has been able to raise its rental rates and improve earnings." Share flat at S$2.25.


Tat Hong 4Q and FY07 results.
TAT Hong Holdings' net profit for the fourth quarter ended March 31 dropped 32 per cent to $28.4 million from the previous corresponding quarter's $41.7 million. The fall reflected a one-off gain of $32 million the crane giant made on the disposal of its stake in construction specialist CSC Holdings during the final quarter of FY07.

Despite the fourth-quarter earnings fall, Tat Hong posted record results for the year ended March 2008, with net earnings rising 14 per cent to $89.8 million on rising rental and utilisation rates and strong contributions from acquisitions. Full-year earnings per share rose to 17.73 cents from the preceding year's 17.13 cents.

Gross profit surged 67 per cent to $249.7 million. Profit before minority interests was up 21 per cent to $101.5 million. This was on a 33 per cent rise in revenue to $639.9 million, from $482.5 million in FY07.

The strong showing was due to contributions from acquisitions in the past year, rising crane rental rates as a supply crunch intensified and higher utilisation rates in key markets that now include the Middle East.

As a result, gross margin widened to 39 per cent, from 30.9 per cent previously.

STI +0.6%, Off Highs; Oil Price Caps Upside-DBS

Singapore shares off highs by end of morning session, tracking pullback for Hong Kong shares; STI up 0.6% at 3150.72 at midday break vs session high of 3166.25. Resistance tipped near 30-day moving average at 3180 with support tipped at yesterday''s low of 3113 if index heads into negative territory. DBS Vickers says sentiment supported by prospect of 1Q U.S. GDP data tonight, which should show U.S. has not slipped into recession, but upside limited by continued inflationary worries; "the specter of high oil price is likely to put a cap on the STI." Broad market volume tailing off, now similar to early part of week with gainers outnumbering losers 249 to 184

Singapore REITs'' Re-Rating To Continue -Deutsche

[Dow Jones] Singapore REITs'' re-rating should continue as the market prices in positive near-term outlook, says Deutsche Bank. Says re-rating to be driven by good trading performances, availability of funding allowing acquisitions, steady physical asset markets. "We see a return to a virtuous cycle for the larger REITs, which have demonstrated their ability to raise capital and acquire assets." Prefers larger REITs that are able to deliver organic growth, raise funding, gain market share. Says smaller REITs may be takeover targets if deep discounts to net assets persist. Top picks are CapitaMall Trust (C38U.SG), Suntec REIT (T82U.SG), Ascendas REIT (A17U.SG); all rated Buy with target prices of S$4.07, S$2.16, S$2.92, respectively. FTSE ST Real Estate Investment Trust index up 1.4% at 830.88 vs FTSE ST All Share +4.8%

MS Keeps Attractive View On Singapore O&M Sector

[Dow Jones] STOCK CALL: Morgan Stanley keeps Singapore offshore & marine sector at Attractive on record oil prices and expected new orders for deep-water rigs, but warns business still cyclical; "don''t forget to get down in time." Says current rig building cycle started in 2005, believes cycle now at midpoint, could last another 4-5 years. "Improving visibility, stretched lead times, and inelastic capacity expansion response should continue to drive the cycle upward." Notes, however, competition intensifying, customers gaining more bargaining power, new jack-up orders slowing, margins eroding on higher costs and USD weakness. Says SembMarine (S51.SG) currently trading at 17X 2009E EPS, rates Overweight; Keppel (BN4.SG) trading at 14X 2009E EPS, rates Equalweight; Cosco (F83.SG) trading at 14X 2009E EPS, rates Overweight. "We believe that offshore stocks could trade up to peak multiples of 20X with positive news flow and high oil prices."

STI +0.4%; Market To Trade Sideways-AmFraser

[Dow Jones] Singapore shares heading slightly higher in lackluster trade at start of afternoon session as gains for high oil price beneficiaries help offset bearish leads from Nikkei, HSI, DJIA pre-market futures; STI +0.4% at 3126.88 with near-term resistance tipped at yesterday''s intraday high of 3134. Upside capped by investors'' lack of appetite for fresh positions amid continued uncertainty over depth of global economic slowdown. AmFraser senior VP of research Najeeb Jarhom says market mood likely to remain subdued in near-term; "the recent sharp fall from 3250-3270 highs suggests investor perception of limited upside potential and at best a sideways market scenario in coming weeks." Broad market volumes remain thin with losers outnumbering gainers 248 to 184

Mid Day Market Update

Singapore shares remain slightly higher at end of morning session as gains for regional indexes set direction in quiet trade; STI +0.4% at 3114.54. DBS Vickers says index upside is likely capped at around 3125-3138 as high oil and commodity prices continue to set a cautious tone, with risk skewed to downside; "our view is for the STI to trend lower to 3010-3038." Tips buying interest to stay around the offshore & marine and palm oil plays during market pullback. Broad market volume remains very thin with gainers outnumbering losers 218 to 167

Palm Oil Shares Up On Palm Oil Rally

Singapore palm plays heading higher as rise in crude palm oil (CPO) prices boosts sentiment; Wilmar (F34.SG) +1.0% at S$5.19, Indofood Agri (5JS.SG) +1.3% at S$2.34, Golden Agri (E5H.SG) +1.0% at S$1.03, First Resources (EB5.SG) +0.9% at S$1.17. All faring better than wider market, FTSE ST All Share +0.4%. Mood likely lifted by strength in CPO prices; CPO futures on Malaysia''s derivatives exchange set new 10-week high today, tracking strong crude oil, soybean prices. DBS Vickers tips Singapore palm plays to continue to perform well amid wider market weakness, says preferred pick is First Resources, says a rise above $1.26 should see stock heading for S$1.40 followed possibly by S$1.55. But Singapore palm stocks seeing thin traded volumes today, with overbought signals from technical indicators, suggests scope for further near-term upside fairly limited.

2 companies with good results

Man Wah
FY08 (ended Mar 2008) net profit +107% to HK$187.8m,which was better than market expectation. Revenue +74.3% to HK$1,485.6m. A final DPS of 3.79 HK cents declared.

China Essence
Net profit +60%yoy to RMB238m with revenue +65%yoy to RMB858.8m for FY08 ended Mar 2008. The reported earnings was better than market consensus. A final DPS of 7 HK cents declared

Singapore: April Industrial Production

Singapore's April industrial production surprised the market by contracting its most in 10 months, dropping 5.7% y/y (Mkt: 6%, UOB: 3.2%), after the revised 12.7% y/y growth in 1Q08. This was due to both biomedical and electronics output contracting in the same month, and came after 1Q08 GDP growth figures were revised down to 6.7% y/y, from 7.2% y/y in earlier estimates. While the headline figure appeared much weaker than expected, we note that most of it was due to the month-to-month output fluctuation in the pharmaceutical sector. April drug output shrank 27.9% y/y, after surging 112.7% y/y in March - but on a 3-month moving average basis, pharmaceutical output still expanded 31.2% y/y in April, from 53% y/y in March. Pharmaceutical production is prone to volatile swings month to month, as drug factories periodically shut down their plants for cleaning prior to a change in product mix. Adjusted for seasonal factors, April IP declined 16.2% m/m, from the revised 0.4% increase in March (Mkt: -5.5%, UOB:-7%), which is largely payback for the strong expansion in factory output in the first 2 months of the year.

2 different views on Singapore Property

By Credit Sussie
The Urban Redevelopment Authority (URA) draft master plan 2008 contains no boost for Singapore property developers, says Credit Suisse. "For landowners/investors who have expected plot ratio increases for their land parcels, the latest draft master plan would have disappointed," says broker in note. Adds, "the government echoed our view that the property market has peaked and it expects property prices to moderate as supply comes on to offset demand over the next one-two years." But says plan does give clearer direction for medium-term, reinforces government vision of improving quality of life, providing pro-business environment with emphasis shifting from Marina Bay to surrounding areas of Jurong lake, Kallang riverside and Paya Lebar. Broker maintains Underweight rating on Singapore property sector.


By Goldman Sach
Singapore''s property developers won''t enjoy a supply crunch or one-off gains from higher plot ratios on existing landbank, Goldman Sachs says after release of Urban Redevelopment Authority''s 2008 draft Master Plan. "This scenario reinforces our view that the recent period of acute supply shortages and rapidly rising rents and capital values will not be repeated. We are sticking to our stand that across different property asset classes, what we are seeing is consolidation not sharp declines as we stay positive on Singapore''s being a structural growth story." Says city-state''s "bulking up" to offer growth opportunities for sector-leading REITs such as CapitaMall (C38U.SG), CapitaCommercial Trust (C61U.SG), CDL Hospitality Trusts (J85.SG). Adds, however, opportunities to take awhile to materialize, developers still must deal with current negative sentiment on residential property

These are the Singapore content on UOBKH Regional Notes. Go to your online trading, under research section, to read the details. Do read the Technical on STI direction.

SINGAPORE
Economics
GDP- 1Q08
Singapore economy accelerated d 6.7% yoy in 1Q08 on construction, manufacturing and services.

Sector
Property - Residential
Draft Master Plan 2008 focuses on decentralisation.

REITs
Rating agencies tend to lag the equity market. Investors should take the opportunity to accumulate
Singapore REITs to lock in the attractive yields.

Technical Analysis
Singapore Bourse
DJIA forms a bearish wedge. FSSTI to weaken towards 2,940.

Cosco Off 3.1%; N/T Uptrend May Still Be Intact

[Dow Jones] Cosco (F83.SG) off 3.1% at S$3.46, tracking weakness among other SGX-listed China plays (FTSE ST China Index down 1.4%). On charts, RSI and Money Flow Index show recent strength waning slightly ever since stock hit May high of S$3.70 earlier this week. Even so, Cosco still trading within ascending triangle pattern in place since early April. If market turns up and volume increases, stock could possibly breach triangle formation, which puts near-term resistance at around S$3.70. If that happens, next hurdle of S$3.85 (April''s highest close) likely to give way easily. Support for now tipped at 20-day moving average of around S$3.41.

S''pore Water Plays To Ride China Demand - CS

[Dow Jones] Singapore water treatment companies are well placed to benefit from exposure to China''s growing demand for clean water, says Credit Suisse; says Beijing''s initiatives to address water supply issues such as wastewater treatment, environmental protection, water recycling are driving robust demand for water treatment facilities. Notes many Singapore water companies are active in China; "companies with good track records in China and differentiated capabilities are well-positioned to capitalize on the strong growth potential." Maintains Overweight call on Singapore water sector as whole with Hyflux Water Trust (D7TU.SG), Asia Environment (A58.SG), Epure (E6E.SG) rated Outperform, Hyflux (600.SG) rated Neutral

STI +0.4% Midday As Oil Price Eases; 3200 Cap

[Dow Jones] Singapore shares struggle to make meaningful gains in largely directionless session, although slight retreat in oil prices helping STI stay in positive territory. Benchmark +0.4% at 3174.72 midday, after being stuck in tight 18-point range for most part of morning. Resistance remains at 3200, with any pullback possibly capped at 3130 (April 8 close). "The market is lackluster. Traders are walking around already. They''re not going to do anything much. Better go have a nice beer this evening and start afresh next week," says trader at bank-backed brokerage. CapitaMall Trust (C38U.SG) top loser on STI, down 4.6% at S$3.35 on move to buy office-cum-retail complex in Singapore, to be partly funded by S$650 million convertible bond sale; investors may be put off by exercise''s low yield of 2.75%, REIT''s high gearing. Overall market volume modest. (

DBSV Prefers Singapore Shipyards To China Peers

Singapore shipyards look a better bet right now than SGX-listed Chinese yards, says DBS Vickers. Says Chinese yards facing headwinds of rising steel costs, increasing labor cost pressure, surging CNY; "while the SGX-listed Chinese yards are well run companies, they may be swimming against stronger currents of negative macro trends as we head into 2009." Broker says Singapore yards look better placed as they face less margin pressure for construction of offshore vessels, are more exposed to still-booming offshore sector, have more attractive share price valuations. Maintains Neutral call on Singapore marine sector as a whole; has Buy rating on ASL Marine Cosco Corp. Jaya Holdings, SembCorp Marine and Hold ratings on Keppel Corp. and Yangzijiang.

DMG buy call on China Farm and China XLX

Agriculture (OVERWEIGHT)
China Farm Equipment : S$0.57 BUY (TP: S$0.88)
China XLX Fertiliser: S$0.97 BUY (TP: S$1.17)

Food a priority
Food prices have escalated throughout the world. The increased production of biofuels is a major contributing factor. The US alone used about 30 million tons of corn to produce biofuel in 2007. We expect increased food production globally, and hence have an OVERWEIGHT call on China’s Agriculture Sector, namely China Farm Equipment and China XLX Fertiliser.

Jiutian Chem - Placement

Jiutian Chem (S$0.16) - Placement proceeds to fund stake in methanol plant
Jiutian is placing out 276m new shares at S$0.135 each (6.17% discount to its average share price in the past two days) to raise S$36.9m, largely to fund an additional 24.5% stake (Rmb98m) in its methanol JV (from 51% to 75.5%). Our FY08-10 EPS forecasts have been reduced by 9-15% to account for the 16.7% dilution from the placement, partially offset by lower interest expenses from lower debt. On the other hand, our target price has been raised from S$0.09 to S$0.10, still based on 1x CY08 P/BV. Jiutian is trading at 13x CY09 P/E, at a steep premium to the peer average of 5-6x. Maintain Underperform on the still-challenging operating environment in FY08. Report by CIMB-GK

Mid Day Update

[Dow Jones] Singapore shares little changed at start of afternoon session as move off lows for China markets, Nikkei and bullish signal from U.S. pre-market futures helps underpin market; STI down 1.2% at 3158.25 vs session low of 3138.55 with support tipped at 3150. But trader at local brokerage says momentum remains with sellers; "I don't think it would be wise to hang onto big positions right now as the outlook for the market is hazy." Keppel Corp. (BN4.SG), SembMarine (S51.SG), SembCorp (U96.SG) and Wilmar (F34.SG) all seeing good gains as investors bet they will benefit from oil price spike. Broad market volumes remain decent with losers outnumbering gainers 368 to 190.

Stocks slide on Fed concerns, oil tops $135

Asian share markets slid for the third straight day on Thursday after the U.S. Federal Reserve slashed the U.S. economic growth forecast and oil surged above $135 a barrel, re-kindling fears of 1980s-style stagflation.

The Fed's warning and the oil price surge cut the legs from May's stock market rally and saddled U.S. stocks with their worst losses in two weeks.

Fretful investors got little comfort from Warren Buffett, the world's richest person, who said that the economic pain was likely to run for a while longer and could get worse.

"I think the tidal wave that hit various financial institutions since last August has largely been recognised and felt," Buffett told a news conference in Madrid at the end of a European tour.
"In terms of the effect on the economy in the United States, we don't know, but I think it will be longer and deeper then many people do. There could well be a lot to come." But he said that for banks at least the worst was probably behind them after the Federal Reserve staved off "really contagious financial panic" with its intervention to prop up investment bank Bear Stearns .

Li Heng- Buy call by Deutsche Bank

Li Heng Chemical Fibre - Deutsche Bank initiated coverage on Chinese nylon producer Li Heng Chemical Fibre with a buy rating and a share target price of S$1.40.

"Li Heng is a market leader of nylon yarn products in Chinaand we believe is now in a position to expand its production capacity to satisfy nylon demand in China," Deutsche analyst James Tan said in a note. Risks to the stock''s investment rating include a drop indemand for its products from Europe and the U.S.and negative publicity for fabric or garments made in China.

Merrill Rates SGX At Sell, Sets Fair Value At S$5

STOCK CALL: Merrill Lynch keeps SGX (S68.SG) at Sell after house''s Pan-Asian Rising Stars Conference in Singapore. Says key takeaways from conference include SGX''s view algorithmic/quant trading is likely next big wave to boost turnover activity on Asian exchanges; algo-trading currently well under 10% of SGX''s total trading activity vs 40%-50% on some other developed market exchanges. Also, notes SGX keeping near-term strategy to attract more overseas listings, especially from China, India, marine sector, and to offer more structured warrants popular with retail investors; says SGX indicates listing pipeline remains healthy but actual IPOs subject to market conditions. Adds, SGX "poured cold water" on chances for M&A among regional exchanges on view most Asian governments will take nationalistic view. Broker adds, "Deciding on the level at which to buy SGX feels much like an attempt to catch a proverbial knife. That said, we think that trading volumes have more downside than upside risks, so would advise investors to wait for better entry levels." Sets SGX''s fair value at S$5.00, equating to 13X FY09E P/E, 45% downside from current levels. Share down 1.1% at S$8.66.

Mid Day Market Update

Singapore shares moving off lows at start of afternoon trade as gains for marine & offshore plays help offset some of the gloom on inflation jitters; STI down 0.4% at 3186.49 vs session low of 3153.75. Marine & offshore plays Keppel Corp. (BN4.SG), SembMarine (S51.SG), SembCorp (U96.SG) heading higher as investors bet high oil price will lead to strong demand for oil and gas E&P equipment. AmFraser senior VP of research Najeeb Jarhom says STI''s current pullback should not be as sharp as those seen earlier in year; "the market environment is more benign than in 1Q despite record oil prices and spate of natural calamities." Tips support for index at 3150-3160. Broad market volumes remain decent with losers outnumbering gainers 314 to 205

Asia Bear Mkt To Last Until Feb 09 -BNP Paribas

BNP Paribas strategist Clive McDonnell forecasts the current Asian equity bear market will drag on until Feb 2009. That''s based on historical patterns - the average length of a bear market generally lasts about 16 months. But that doesn''t mean it''ll be all downhill until then - McDonnell sees ups and downs. He recommends going long oil and gas, materials; short industrials, consumer services during declines. During bear market rallies recommends going long industrials, IT, short on utilities, oil & gas. BNP Paribas is underweight China, India, Indonesia while overweight Korea, Taiwan, Hong Kong, Singapore and Malaysia.

ASL Marine recommended by DBSV

Relevance: We forecast recurring net profit growth of 43% and 18% for ASL in FY08 and FY09 to S$48.8m and S$57.5m, respectively. This is supported by good order book visibility on its shipbuilding division, and steady demand for its ship charter fleet and ship repair business.

Our fair value for ASL is S$2.01; using 10x diluted FY09 PE (financial year ended June) for its shipbuilding and charter operations and 12x diluted FY09 PE on its higher margin ship repair business. With a price upside potential of 57%, we initiate coverage on ASL with a BUY rating.

CS and Barclays see big drop in property value n rental

http://www.straitstimes.com/Free/Story/STIStory_239497.html

THE slowdown in the Singapore housing market has prompted two banks to predict a dramatic plunge in home values in the next two years.

The reports, issued in the last two weeks, pointed to the malign cocktail of a flood of new homes coming on the market, climbing vacancy rates, a rising number of unsold condominiums and fewer rental transactions.

Note : Avoid property counters

STI Down 0.9%; Charts Tip End To Uptick -CIMB

Singapore shares heading lower in early trade as oil price, inflation worries dampen sentiment; STI down 0.9% at 3169.66 with support tipped at this month''s intraday low of 3140. CIMB says technical analysis suggests U.S. and regional indexes have likely ended their uptick from mid-March lows; "investors can expect more correction for global and regional markets over the next few weeks." Blue chips mostly lower, with NOL (N03.SG) worst performer, down 3.0% at S$3.83, possibly due to fears high oil price will lead to higher operating costs. Broad market volumes moderate with losers outnumbering gainers roughly 3 to 1

Yanlord, China Property Market weak- GS

Yanlord Land (Z25.SG) heads lower as worries over weakness in China property market weigh on sentiment; stock down 3.4% at 4-week low of S$2.28. Goldman Sachs says primary market property sales in China''s major cities were down 12%-78% on year last week with earthquake-hit Chengdu market particularly weak. Broker notes number of unsold properties is growing; "we are concerned about inventory building up quickly in Shenzhen, Beijing, Chengdu and Xi''an." Broker highlights risk that spiraling downward sentiment in Shenzhen could spill over to other major cities in China, sees further downside for China developers'' share prices, earnings forecasts. But Yanlord now oversold on technical indicators after 5 straight days of declines and volume accompanying selldown tailing off, so may find a floor soon with support tipped at April 21 low of S$2.16

Another gloomy forecast by Oppenheimer

http://www.bloomberg.com/apps/news?pid=20601084&sid=auq3s_xEc9BI&refer=stocks.

Another gloomy forecast by Oppenheimer.
The U.S. credit crisis will extend into and even beyond 2009 as banks will write off more than $170 billion of additional reserves by the end of next year, according to Oppenheimer & Co. estimates.

Risks to Financial System Remain

http://www.bloomberg.com/apps/news?pid=20601083&sid=ahE9AhLa3EvE&refer=currency

In the beginning, there was a lack of confidence. This leads to a credit squeeze. Central Banks around the world added liquidity and in the US, where it all begins, the Federal Reserve Bank lowered interest rate. This helps to stabilize the financial markets around the world.

What follows is no longer a lack of confidence. It is a result of a reduction in spending due to higher inflation, higher price, loss of jobs and less earning around the world. You will realise many companies are reporting lower income due to margin squeeze. There are more company giving profit warning as well recently. Even in China, where growth is still in the single high digit, you will have notice more companies giving profit warning. During the recent quarterly reporting, many companies reported lower gross margin.

After a flat opening, Singapore market fell apart

After a firm opening, FT STI starts to tumble when the HK market opens. 2 factors result in the weak sentiment.

1. http://www.bloomberg.com/apps/news?pid=20601084&sid=avJdN6c4hWAM&refer=stocks


2. http://www.bloomberg.com/apps/news?pid=20601084&sid=aqhP3qVp8NFg&refer=stocks


Like what they said " Sell in May and go away"

Bernanke: Financial turmoil in markets easing

By Jeannine Aversa, AP Economics Writer

WASHINGTON (AP) -- Turmoil in financial markets has eased somewhat, but the situation is still "far from normal," Federal Reserve Chairman Ben Bernanke said Tuesday.
The central bank has taken a number of unconventional steps -- especially since March, when the credit crisis intensified -- to help squeezed banks and big investment firms overcome problems and try to get credit flowing more freely again.

Those efforts appear to be paying off and "have contributed to some improvement in financing markets," the Fed chief said in prepared remarks delivered via satellite to a financial markets conference sponsored by the Federal Reserve Bank of Atlanta in Sea Island, Ga.
Bernanke noted some improvements in the markets for certain mortgage-backed securities, such as those backed by Fannie Mae and Freddie Mac, as well as some fixed-rate mortgages and corporate debt.

Moreover, the Fed's extraordinary decision in March to let investment firms go to the Fed for emergency loans "seems to have bolstered confidence," Bernanke said.
"These are welcome signs, of course, but at this stage conditions in financial markets are still far from normal," he said.

For instance, there are still strains involving a widely used interest rate called the London interbank offered rate, or Libor, Bernanke said. And "funding pressures" have also been evident in the "strong participation" of commercial banks in a Fed auction program that has made billions of dollars available in short-term cash loans, he said.
Bernanke said the Fed policymakers "stand ready" to further increase the size of these loans in the future if warranted by financial developments.

In his speech, Bernanke did not talk about the Fed's next move on interest rates or the broader state of the U.S. economy, which many fear is on the edge of a recession or in one already.
To bolster the economy, the Fed last month cut a key interest rate by one-quarter percentage point to 2 percent. At the same time, policymakers indicated that their rate-cutting campaign, which started in September, could be drawing to a close. If that happens, many economists believe the Fed will focus more on its various efforts to relieve stressed credit markets.
After a run on Bear Stearns pushed the nation's fifth-largest investment bank to the brink of bankruptcy in March, fears grew that others might be in jeopardy, given major stresses in credit and financial markets at that time.

Scrambling to avert a market meltdown, the Fed -- in the broadest use of the central bank's lending authority since the 1930s -- agreed in March to temporarily let investment firms obtain emergency financing from the Fed, a privilege previously granted only to commercial banks. That's one of the Fed's most significant actions.

The Fed also has moved to make cash loans to commercial banks and to make super-safe Treasury securities available to investment firms. All these efforts are aimed at bolstering confidence and getting firms to behave in a more normal fashion so they'll be more inclined to lend to each other, consumers and businesses.

Ultimately, financial companies will need to raise new capital and improve risk management to address the fundamental sources of financial strains, Bernanke said. "This process is likely to take some time," he added.

And once financial conditions become more normal, the extraordinary provisions to provide ready sources of cash to financial institutions will no longer be needed, he said.
Even as the Fed has stepped in to provide such help, it also is mindful of creating a "moral hazard," where financial institutions might be more inclined to take certain risks if they believe the Fed will be there to bail them out.

"The problem of moral hazard can perhaps be most effectively addressed by prudential supervision and regulation that ensures that financial institutions manage their liquidity risks effectively in advance of the crisis," Bernanke said.

The Fed is reviewing its policies on this front to see if improvements can be made, he said.
"Of course, even the most carefully crafted regulations cannot ensure that liquidity crises will not happen again," Bernanke said. But if moral hazard is mitigated and if financial institutions and investors tighten up risk-management practices, "the frequency and the severity of future crises should be significantly reduced," he said.