Financial stocks are likely to pull the STI lower in the current session, in line with the region. No change in our technical view on the STI, downward bias to 2680 before hitting a low. Technically, we continue to be negative on commodity and O&M plays – If global growth doesn’t recover, neither will commodity and oil prices. We also maintain our view that the SSEC is near an inflexion point at 2200.
Concerns about the coming to market of 11.9bn previously non-tradable shares of Baoshan Iron & Steel as well as the Chinese insurance regulator urging insurers to cut their holdings in A-shares because of the 'uncertain' economic outlook resulted in a 5.3% drop in Shanghai market yesterday. The insurance regulator's advice runs counter to that of the China Securities Regulatory Commission, which has asked mutual funds not to sell equities in an attempt to bolster the market.
We are not swaying our technical view for the SSEC that an inflexion point should occur at 2200. Besides technical factors, a further weakening of oil and commodity prices in coming months, could give policy makers room to boost the economy without fuelling inflation. The Chinese central bank mentioned late last week that it would ‘fine-tune’ monetary policy as weakening overseas demand poses risks to the economy.
FerroChina’s (Buy, TP: $2.67) share price was down by 11% yesterday. A check with management shows that there has been no new development since last week’s release of results.
Jaya’s FY08 net profit rose 24% to S$149.7m, in line with our expectations. We estimate that net margin for chartering operations (excluding vessel sale gains) improved 7.7ppt to 48% as it is now operating a larger proportion of higher value added vessels. Net margin for shipbuilding also improved, rising 3.4ppt to 25.4%. Both newbuild and charter rates are rising and this will bode well for Jaya. Maintain Buy, TP S$2.07. Valuations are undemanding. In addition, Jaya offers a very attractive yield of 10%.
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Financial stocks are likely to pull the STI lower in the current session, in line with the region. No change in our technical view on the STI, downward bias to 2680 before hitting a low. Technically, we continue to be negative on commodity and O&M plays – If global growth doesn’t recover, neither will commodity and oil prices. We also maintain our view that the SSEC is near an inflexion point at 2200.
Concerns about the coming to market of 11.9bn previously non-tradable shares of Baoshan Iron & Steel as well as the Chinese insurance regulator urging insurers to cut their holdings in A-shares because of the 'uncertain' economic outlook resulted in a 5.3% drop in Shanghai market yesterday. The insurance regulator's advice runs counter to that of the China Securities Regulatory Commission, which has asked mutual funds not to sell equities in an attempt to bolster the market.
We are not swaying our technical view for the SSEC that an inflexion point should occur at 2200. Besides technical factors, a further weakening of oil and commodity prices in coming months, could give policy makers room to boost the economy without fuelling inflation. The Chinese central bank mentioned late last week that it would ‘fine-tune’ monetary policy as weakening overseas demand poses risks to the economy.
FerroChina’s (Buy, TP: $2.67) share price was down by 11% yesterday. A check with management shows that there has been no new development since last week’s release of results.
Jaya’s FY08 net profit rose 24% to S$149.7m, in line with our expectations. We estimate that net margin for chartering operations (excluding vessel sale gains) improved 7.7ppt to 48% as it is now operating a larger proportion of higher value added vessels. Net margin for shipbuilding also improved, rising 3.4ppt to 25.4%. Both newbuild and charter rates are rising and this will bode well for Jaya. Maintain Buy, TP S$2.07. Valuations are undemanding. In addition, Jaya offers a very attractive yield of 10%.
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