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hmm... soon events in the mid-east will become centerstage, dwarfing all other issues, given iran's nuclear ambitions
Goldman Sachs has named Steven Barg as co-head of investment banking for Southeast Asia, moving the high-profile equity capital markets banker from Hong Kong to a region where deal activity is booming.
Barg, who was co-head of equity capital markets in Asia excluding Japan, will relocate to Singapore and join Hsin Yue Yong in the investment banking role, according to a memo seen by Reuters and confirmed by Goldman.
The move allows Goldman to position Barg in a role where he will continue to source equities deals but also oversee the firm’s attempts to grow its Southeast Asia business.
Barg’s co-head, Jonathan Penkin, will remain as sole head of equity capital markets Asia.
Goldman is among the banks that have benefited from the surge in capital market activity in Malaysia, which saw two of the world’s three biggest initial public offerings this year. Senior sources at the bank, however, concede that Goldman could have done better in Southeast Asia as a whole in recent years, a situation Barg’s deployment is intended to remedy.
Iran will have bomb in two years says MI6
Singapore News.netSaturday 14th July, 2012
The head of Britain's foreign intelligence agency, MI6, has said he believes Iran will have nuclear weapons within two years.
Sir John Sawers said Iran would most likely continue to try to achieve the ability to explode nuclear weapons, making it vulnerable to attacks by the US or Israel.
The Daily Telegraph disclosed his assessment of Iran's nuclear capability, which was delivered last week in a speech to high-ranking civil servants.
The Telegraph said Sir John had not made an assessment of Iran's nuclear ambitions before.
He was appointed as head of MI6 in 2009.
During Sir John's speech, he said: " The Iranians are determinedly going down a path to master all aspects of nuclear weapons all the technologies they need. It's equally clear that Israel and the United States would face huge dangers if Iran were to become a nuclear weapon state."
The Telegraph reported Sir John said it would be up to the UK government to " delay that awful moment when the politicians may have to take a decision between accepting a nuclear-armed Iran or launching a military strike against Iran. I think it will be very tough for any prime minister of Israel or president of the United States to accept a nuclear-armed Iran."
He made a point of predicting that Iran would become a " nuclear weapons state" in two years.
Iran has long been suspected of using a civilian energy program to cover up the development of enrichment of nuclear material in order to build a bomb.
The UK government has often accused Iran of making the ultimate decision to move its nuclear ambitions from civilian use to a nuclear weapons capability.
Last week, the United States announced it had laid charges against an Iranian citizen and Chinese resident over the alleged export of nuclear-related material to help Tehran enrich uranium.
One of the men, an Iranian citizen, was arrested in May in the Philippines after a request from the United States.
The Chinese resident remains at large.
Stalled talks may be re-started by North Korea
Singapore News.netSaturday 14th July, 2012
Cambodia has made informal overtures that it may be willing to continue talks that were stalled in 2009.
According to Press TV, the Cambodian Foreign Ministry confirmed that North Korea was ready to rejoin six-party talks which had originally been set up to denuclearise the Korean Peninsula.
A Cambodian Foreign Ministry spokesman revealed that North Korean Foreign Minister Pak Ui-Chun made the offer during a meeting with the Cambodian Deputy Prime Minister Hor Namhong in Phnom Penh on Saturday.
Further six-party talks would involve North Korea, China, Japan, Russia, South Korea and the United States.
In 2009 Pyongyang representatives walked out in protest after the UN announced sanctions against North Korea following nuclear and missile tests.
Informal weekend meetings in Phnom Penh have come on the heels of an Asian security gathering during which North Korea said it needed atomic weapons to deter a US nuclear threat.
Pyongyang has long accused the United States of plotting with others in the region to topple the North Korean government.
Weekly Technical Report on STI & Stocks:-
Straits Time Weekly Wrap:
S1: 2965
S2: 2935
S3: 2900
R1: 3015
R2: 3040
R3: 3070
Open: 2957.59
High: 2999.34
Low: 2929.08
Close: 2995.56
Change (In Points): +17.02
% Change: +0.66%
WEEKLY WRAP OF STI:-
* Its 5th straight week gain in Singapore Equities it was performed extremely well throughout the week.
* Singapore equities open with gap down @ 2957.59 with loss of almost 20 points and then same day it fell and took support @ 2929.08 levels, after taking support at this level STI didn’t see back and touched its highest level of 2999.34 and finally closed @ 2995.56 near to high , with gain of 17.02 points up by 0.66% wow basis.
* The Department of Statistics Singapore announced on Friday retail sales decreased 2.7 % in May 2012, compared to a month ago. Excluding motor vehicles, retail sales went down by 3.3 per cent month-on-month.
* MTI announced dip in Singapore's Gross Domestic Product (GDP) to 1. % quarter-on-quarter for Q2 2012.Compared to Q2 2012, GDP for Q1 2012 was at 9.4 %, showing a wide difference between both quarters.
MARKET FORECAST FOR WEEK AHEAD:-
* STI closed above multiple resistance level of 2995.56 marks and near to 3k mark. Highest level after April month.
* As we mention in our weekly report that if STI maintain above its 2910 mark than it can move towards new higher level and STI in last week build strong confidence for taking long positions.
* Technically STI looking more bullish above 2995-3000 mark, as it previously facing support @ 3035-3040 level we expect this time it can breached this mark.
STI SUPPORT:-
* STI having strong support @ 2965 and below this level 2935-2900 will be the major support zone for coming week.
STI RESISTANCE:-
* STI having major resistance @ 3015 level, above this level 3040-3070 will be the major Resistance for market.
TECHNICAL INDICATORS:-
* Technical Indicator RSI is trading above to its centreline of 50. @ 59.71. MADC & Stochastic looking bullish on chart.
Petrobras may raise gasoline price further: report
(Reuters) - Brazil's state-led oil company Petrobras (
PETR4.SA) may raise gasoline prices again this year, a move that would improve the image of the company's new chief executive in the eyes of the market, a local paper said on Saturday.
Petrobras shares rose 5 percent on Friday after the company said the night before it would raise wholesale diesel prices by 6 percent, the second price increase in less than a month. Domestic fuel sales make up a large share of the company's revenues.
In late June, the market pummeled company shares after Petrobras management announced its first price increases in diesel and gasoline in roughly eight years, moves the market considered too modest to staunch heavy losses in its fuel-distribution business.
On Saturday, O Estado de S. Paulo newspaper cited Energy Minister Edison Lobao saying about gasoline, " We can imagine that there could be a change in prices at the pump still this year."
The company has been registering losses from its distribution arm due to government policy to freeze fuel prices that has forced the company to import gasoline and diesel at market prices and sell at below-market rates.
Although the June wholesale price increases of 7.8 percent in gasoline and 3.9 percent in diesel were not felt at the pump, Lobao said the next price increase in gasoline would be passed to the consumer.
The government has been concerned higher fuel prices may raise inflation, but these fears appear to have abated as the local economy slows and Petrobras has reported increasingly disappointing
earnings.
Credit Suisse analysts Emerson Leite and Andre Sobreira said about the company's increase in diesel prices last week that it " reinforces the credibility of (Petrobras CEO Maria das) Gracas Foster who, after suffering market pressure, managed to secure the price increase."
(Reporting by
Reese Ewing Editing by
Philip Barbara)
Property: Parc Centros, a 618-unit Condo in Punggol, Debuts Next Weekend
by Ernie B. Calucag
Parc Centros, a 618-unit condominium near Punggol MRT station, will be launched next weekend, July 21.
Wee Hur Holdings Ltd, the developer, said Parc Centros is its largest residential development to-date, and also the first condominium to offer 5-bedroom apartments in the surrounding area of Punggol.
Parc Centros consists of eight blocks of 16-storey buildings. Aside from 5-bedders, the development will also offer units from 1-, 2-, 3-, 4-bedders, in addition to penthouse units.
The units are priced at an average of S$950 per square foot (psf).
“Every detail in the condominium has been designed with the home buyers in mind. We have consciously created a spacious functional design with larger units for families and intimate shared spaces for the different lifestyle needs of both young couples and families. This is a living space for everyone,” said Goh Yeow Lian, Executive Chairman and Managing Director of Wee Hur.
“We see a lot of potential in this site particularly since it is a stone’s throw from Punggol MRT station and in the vicinity of upcoming megamall, Waterway Point and eateries,” he added.
The 99-year leasehold property is situated within close proximity to Punggol Town’s transport hub comprising of the MRT and LRT stations and bus interchange, shopping centres, numerous schools, including a future international school and recreational spaces.
The condominium is a 3-minute walk away from the Punggol MRT station and a mere 5-minute walk from the upcoming megamall, Waterway Point.
Wee Hur said Parc Centros is aligned with the Punggol 21 Plus vision and will feature lush landscapes with key spaces such as The Water Scape featuring a mini water theme park, The River Stream Pods for tranquility, The Island Cabana for those lazy afternoons, The Tropical Terraces for BBQ and get togethers, Sensory Forest Tree House for a relaxing forest walk and Bamboo Trail for the fitness buffs.
“With the Punggol 21 Plus masterplan in its infancy, we are excited to be part of the Singapore’s first eco-town which will feature an anatomy of amenities and recreational spaces for residents to live, work and play,” Goh noted.
Wee Hur targets the property’s
Temporary Occupancy Permit (TOP) for December 2016.
The showflat located at Punggol Central will be available for public viewing from 21 July 2012 at 2 pm.
STI Surges Close to 3,000 Level
by Donavan Lim
Singapore equities rallied on Friday despite uninspiring economic data.
Growth in China, the world second largest economy slowed to 7.6 per cent in the second quarter – triggering hopes for a stimulus package and giving a boost to investors.
“Overall we feel the numbers are probably the best-case scenario for risk assets, as the print was just weak enough to keep the markets’ anticipation of aggressive easing alive, while it was not too hot to take this notion away from the equation,” stated Justin Harper of IG Markets.
Singapore economy also lost momentum, reporting a 1.1 contraction in the second quarter, further adding to fears that the European contagion has arrived upon Asian shores.
The benchmark STI edged up 23.520 points, ending at 2,995.560 Friday, just 4.44 points shy of the 3,000 psychological resistance level.
Property counters with China exposure fared well. CapitaLand moved up 1 per cent to S$2.95 while Hong Kong Land surged 1.4 per cent to US$5.98.
Commodities counters delivered a mixed bag of performance. Noble Group stayed unchanged at S$1.105 while rival Olam International closed marginally higher to S$1.86.
Regionally, Nikkei 225 index closed marginally higher at 8,724.12 points while Hong Kong’s Hang Seng Index edged up to 19,092.63 points.
On late Friday, investors will have earnings on their radar screen with US companies, JP Morgan and Wells Fargo reporting their numbers.
CapitaLand (BUY Target Price: S$4.06)
CapitaLand and Ascott Residence Trust (ART) are proposing an asset swap involving The Ascott Limited’s (TAL) Ascott Raffles Place (ARP) and Ascott Guangzhou (AGZ), and ART’s Somerset Grand Cairnhill (SGC). CapitaLand, via TAL, will acquire SGC from ART for S$359 million, while divesting ARP and AGZ to ART for a total of S$283.3 million. SGC will be redeveloped into a mixed project comprising high-end residential units and a new serviced residence with a hotel licence, which ART has a call option to repurchase in future at an agreed price of S$405 million. As a result of the transactions, CapitaLand could book in net gains of S$98.9 million in FY12. Located just off Orchard Road, CapitaLand will be acquiring a piece of prime property. Including differential premium and lease extension premium estimated at up to S$180 million, the acquisition works out to approx. S$1,156 psf GFA. We estimate the net sellable area at 222,600 sq ft, with a potential ASP of S$2,800 psf on an estimated breakeven of S$2,100 psf. This translates to a fairly attractive pre-tax margin of 25 per cent. The deals are expected to be yield-accretive for ART, as it will be divesting SGC at an EBITDA yield of 3.8 per cent, while acquiring ARP and AGZ at 4.1 per cent and 5 per cent respectively. Even the new Cairnhill serviced residence is projected to have an EBITDA yield of 4.5 per cent at the agreed price. On a pro-forma basis, ART’s FY11 DPU would grow by 4.1 per cent as a result of the enlarged portfolio. The transactions, subject to ART’s unitholders’ approval, highlight the point that the much maligned Sponsor-REIT model can lead to mutually beneficial outcomes and it remains an integral part of CapitaLand’s capital recycling model. Reiterate BUY, with a target price of S$4.06 pegged to a 20 per cent discount to RNAV. – Maybank Kim Eng Research
China Minzhong (HOLD Target Price: S$0.60)
Since our last report on 2Q12’s results note in February, the stock has fallen 40 per cent from S$1.01 to S$0.61. We believe the stock has derated from 3.7x FY13F PE in February to 2.7x FY13F PE, marred by poor fundamentals. We believe weak fundamentals are likely to persist going forward. The slower-than-expected flushing out of crops due to the winter delay in FY12 and persistently higher costs are likely to depress margins going forward. We believe MINZ is heading into a consolidation mode as management slows down farmland expansion and concentrates on attaining optimal operating efficiencies. On the back of higher costs and unexciting outlook, we assume declining gross margins from 38 per cent in FY12 to 35.3 per cent in FY14F will lead to muted growth of 3 per cent/8 per cent for FY13F/FY14F. Valuation is no doubt a steal at 2.7x forward PE. However, in view of the more challenging outlook faced by MINZ, we believe taking a more cautious stance is more appropriate for now. We would be buyers only if fundamentals turn significantly positive. Downgrade to HOLD. – DBS Vickers
Ezra Holdings (BUY Target Price: S$1.35)
Ezra Holdings reported a 61 per cent YoY rise in 3QFY12 revenue to US$265.6 million and a 244 per cent increase in net profit to US$22.4 million, such that 9MFY12 net profit accounted for 81.5 per cent and 85.5 per cent of ours and the street’s full-year expectations, respectively. Excluding one-off items such as fair value changes with respect to derivative instruments and foreign exchange gains, we estimate core operating profit to be around US$11m vs 2QFY12’s US$3 million. Revenue increased in both the offshore support services and subsea services divisions in 3QFY12, due to contributions from an expanded vessel fleet and commencement of new projects awarded after the acquisition of AMC. Marine services, however, saw a decline of US$25.7 million in turnover due to lower revenue recognized for engineering projects in Vietnam compared to 3QFY11. Gross margin was 17 per cent in the last quarter compared to 16 per cent in 2QFY12 and 18 per cent in 3QFY11. However, administrative expenses continued to rise to US$34.0 million in 3QFY12 vs US$31.7 million in 2QFY12 and US$26.6 million in 1QFY12. We would monitor this figure to see if the group is able to rein in costs after the acquisition of AMC. The group announced that it has won six contracts worth about US$87 million for the charter of PSVs and AHTS vessels. The contracts have an average tenure of two years (including options) and the units will be deployed in Asia and Africa. Meanwhile, Ezra’s engineering, ship construction and fabrication services arm also clinched a US$77 million contract to build a specialized offshore unit. The group remains cautiously optimistic about the outlook of the oil and gas industry, and we believe the focus going forward should be on the smooth execution of subsea projects. As we still see an upside potential of 24.3 per cent based on our fair value estimate of S$1.35, we maintain our BUY rating on the stock. – OCBC Investment Research
Raffles Medical Group (BUY Target Price: S$2.73)
We believe that Raffles Medical Group (RMG) would continue to benefit strongly from the healthy uptrend in medical travellers to the region, despite growing supply of new hospital beds from both local and regional competitors. This is premised on the group’s competitive pricing vis-à-vis its comparable peers, strong brand equity and continued drive to enhance the depth of its specialist offerings. Research firm Frost & Sullivan projected that the number of medical travellers to Singapore and the corresponding revenues generated would grow at a CAGR of 12.4 per cent and 13.6 per cent to 851,000 and S$2.03 billion, respectively, from 2012 to 2016. RMG’s new Specialist Centre in Orchard is scheduled to begin operations in 1H13, while its Raffles Hospital extension (additional 102,408 sf) is expected to be completed in early 2015. In the meantime, management has actively decanted some of its existing hospital facilities. This resulted in the opening of a Neuroscience specialist centre in Apr, while renovation works are ongoing for the expansion of its Health Screening facilities. We reckon this would improve its income streams as there could be follow-up treatment procedures. RMG recently implemented wage increments across the board in 2Q12, driven by the Singapore government’s initiative to raise salaries in the public healthcare sector. We ease our EBIT margin assumptions and our PATMI forecasts for FY12 and FY13 are reduced by 2.1 per cent and 1.4 per cent, respectively. We believe that part of RMG’s cost pressure also arose from headcount expansion in preparation for the commencement of its new Specialist Centre. While these additional staff would also aid in the generation of revenue at existing premises now, pre-operating expenses incurred would cause some drag on its earnings as their contribution is not at an optimal level yet, in our view. We roll-forward our valuations to 24x blended FY12/13F EPS, which in turn raises our fair value estimate from S$2.58 to S$2.73. – OCBC Investment Research
Singapore Exchange (SELL Target Price: S$5.00)
SGX has signed a Memorandum of Understanding with London Stock Exchange (LSE) to jointly develop capabilities to enable cross-trading of their largest and most actively traded stocks. With this agreement, SGX members will be able to trade FTSE100 securities on SGX’s GlobalQuote Board while LSE members will be able to trade 36 securities of Singapore’s leading indices on LSE’s newly-created International Board. The collaboration will occur in stages. Subject to regulatory approvals, the SGX securities will be quoted on LSE’s International Board by early next quarter while the LSE securities will be quoted on SGX’s GlobalQuote by 1H13. Recall the October 2010 quoting of ADRs of Asian companies on GlobalQuote, which met with limited improvements in ADT (partially attributed to the market conditions). Whilst we are positive on SGX’s continued innovation to develop new products, the benefits may only show up in the longer term. The current market conditions could lead to continued weakness in ADT. Our target price of S$5.00 is premised on FY13 ADT of S$1.5 billion, versus the MTD ADT of S$1.1 billion. The risk of market players lowering their ADT expectations is high. – OSK-DMG
Tiger Airways (BUY Target Price: S$0.92)
Tiger Airways Singapore saw a 15 per cent YoY increase in carriage to 645 million p-km in June 2012, while load factor stayed flat at a robust level of 86 per cent. This is an improvement on May 2012 load factor of 82 per cent, and indicates that demand is finally catching up with the significant capacity increase in Singapore operations in FY12. Operations in Australia also continue to register improvement, with load factor improving from 74 per cent in April and 75 per cent in May to a healthy 82 per cent in June. As a group, passenger carriage (RPK) in the month of June 2012 rose by 3 per cent YoY to 831 million p-km on a slight decrease in load factor by 1 ppt to 85 per cent, as group capacity rose by 4 per cent YoY. Tiger Airways also recently announced the appointment of Koay Peng Yen as its new CEO, to take over from Chin Yau Seng, who will be returning to Singapore Airlines after doing a commendable job in restoring confidence in the carrier. Koay has served in top leadership roles in the marine, offshore and shipping industries in the recent past, including a long stint at NOL Group, and though he has no prior experience in the airline industry, he brings proven leadership and strategic skills to the table and his appointment lends stability at the top to take the Tiger story forward. Looking ahead, with Tiger Australia having started operations from its second base in Sydney on July 1 and gradually restoring flights to pregrounding scale by October 2012, we expect the carrier to move steadily towards profitability and expect the group as a whole to be profitable by the last quarter of CY2012 (3QFY13). – DBS Vickers
WDA to Inject S$8.3 million Over Next 3 Years to Boost Biomedical Sciences Productivity
by Ernie B. Calucag
The Workforce Development Agency (WDA) will inject S$8.3 million into the process and biomedical sciences industry over the next three years to boost productivity in the sector.
With multinationals set to ramp up its operations here in the next few years, the government said it is necessary to build up a pipeline of skilled workers to support this growth.
The funds will go into two new training programmes, targeting new hires and senior staff.
Minister of State for Manpower Tan Chuan Jin said the new programmes also aim to groom Singaporeans to occupy top positions in the industry.
The process industry comprises chemicals and oil refining, engineering services, and pharmaceuticals manufacturing.
It employs about 100,000 workers and contributes around 10.3 per cent to Singapore’s gross domestic product.
Billionaire HK Property Tycoons Charged in Bribery Case
Thomas and Raymond Kwok, the billionaire co-chairmen of Sun Hung Kai Properties, and Rafael Hui, Hong Kong’s former No.2 public official, were charged Friday in a bribery investigation surrounding Asia’s largest developer.
The Sun Hung Kai probe, Hong Kong’s biggest corruption case since its anti-graft agency was formed nearly 40 years ago, involves one of Asia’s most powerful families and the world’s second-largest property company with a market capitalisation of US$32 billion.
The charges involve payments and unsecured loans of more than US$4 million and come amid other investigations of government officials and a turbulent political transition that has set off waves of protests from Hong Kong citizens angry about a host of issues including cronyism and cosy ties between government officials and the city’s tycoons.
Friday’s charges came a day after the anti-graft agency arrested Hong Kong’s development secretary on suspicion of corruption, dealing a fresh blow to the city’s new leader, Leung Chun-ying.
Two others have also been charged in the Sun Hung Kai case. Thomas Chan, the Sun Hung Kai board member in charge of land purchases, and Francis Kwan, a former banker, were charged by the city’s Independent Commission Against Corruption. Kwan is a former chief operation officer of the Hong Kong Futures Exchange.
A total of eight charges were filed against the five men, who appeared before a Hong Kong judge on Friday and said they understood the charges, including conspiracy to offer advantages to a public servant and misconduct in public office.
Hui, who was calm throughout the half-hour proceeding, was named in each of the eight charges in connection with alleged payments and unsecured loans totalling about HK$34 million (US$4.38 million).
Raymond Kwok delivered a statement on the courthouse steps, saying “I firmly believe I haven’t done anything wrong. The Hong Kong judicial system is very fair. I will do my best to defend myself against those accusations. My goal is to prove my innocence.”
Thomas Kwok declined to comment and Thomas Chan also declined comment.
The magistrate hearing the case ordered Hui and Kwan to surrender their travel documents and remain in Hong Kong. Public prosecutor Kevin Zervos said Kwan was “a flight risk.”
All five were released on bail and ordered not to contact a list of prosecution witnesses given to the court. The case was then adjourned until October 12.
The ICAC said the alleged offences took place between 2000 and 2009, with six linked to Hui’s tenure as Hong Kong’s chief secretary. Hui faces two misconduct charges alleging he accepted rent-free use of two flats while head of Hong Kong’s retirement authority and two unsecured loans.
He is also alleged to have accepted payments to “wilfully misconduct himself” to be “favourably disposed” to Raymond and Thomas Kwok and their interests and to Thomas Chan, according to the charges.
Reuters reported in April the ICAC was investigating payments to Hui, before and after his official role, in relation to Sun Hung Kai.
Hui and Thomas Kwok face a joint charge of conspiracy to commit misconduct in public office, while Hui and Raymond Kwok faces a similar charge.
Hui, Thomas Kwok, Chan and Kwan are also charged with one count of conspiracy to commit misconduct in public office, alleging they conspired together for Hui to receive a series of payments from Thomas Kwok, Chan and Kwan.
Shares of Sun Hung Kai, Asia’s most widely held property stock, fell 0.7 per cent at the open, but were up 0.5 per cent when trading was suspended. The shares have slumped 14 per cent since the March arrests. Trading in Sun Hung Kai units SmarTone Telecommunications Holdings Ltd and SUNeVision Holdings Ltd, was also suspended on Thursday.
Sun Hung Kai has applied for permission to restart trading on Monday.
Singapore GDP Falls 1.1 Per cent in 2Q2012, Recession Likely in 3Q2012
by Donavan Lim, Ernie Calucag
Singapore’s economy contracted in the second quarter this year as Europe’s debt crisis took its toll on the country’s economy.
Gross domestic product fell an annualised 1.1 per cent in the three months through June from the preceding quarter, when it surged a revised 9.4 percent, the Ministry of Trade and Industry (MTI) said Friday.
On a year-on-year basis, the economy grew 1.9 per cent, following the 1.4 per cent growth in the previous quarter.
The 2Q2012 figures came in weaker-than-expected against market expectations of 2.3 per cent growth year-on-year, and 1 per cent growth quarter-on-quarter.
The slowing growth momentum in the second quarter was mainly attributed to a sequential contraction in the manufacturing sector, which fell by 6.0 per cent, reversing the 20.9 per cent expansion in the preceding quarter, stated MTI.
Specifically, the fall in manufacturing output was due to a decline in biomedical manufacturing output, which offset gains in the transport engineering cluster.
Manufacturing accounts for about a quarter of Singapore’s GDP.
Elsewhere, the construction sector managed to chalk up gains of 5.1 per cent on a year-on-year basis as compared with 6.9 per cent. Sequentially, the industry grew 0.3 per cent.
At the same time, the service sector managed to grow modestly at 1.0 percent on a year-on-year basis, down from 1.9 per cent last quarter. This was mainly due to contraction in the wholesale and retail trade, as well as the finance and insurance sectors.
With the surprise contraction, economists said weaker global business and consumer sentiment is now hitting trade-dependent economies such as Singapore.
“2Q2012’s disappointing data does not bode well for Singapore and the rest of trade-dependent Asian economies, which points to the continued gloomy external outlook, and decline in trade,” said UOB economist Chow Penn Nee.
Going forward, Chow noted that if services and manufacturing sectors continue to weaken, Singapore risks entering a technical recession in the third quarter.
“But even if we enter a technical recession, it’s likely to be short and shallow,” the UOB economist argued, adding that UOB is maintaining full year GDP growth at 2.5 per cent.
Justin Harper of IG Markets in Singapore holds a different view however. He noted that there is no need to press the panic button yet, as Singapore economy remains healthy given the backdrop of the sluggish global economy and the eurozone crisis.
“The economy shrank 1.1 per cent but this is a slightly unfair comparison as 1Q2012 was a very different picture to 2Q2012, when optimism, manufacturing and orders were much higher as traders expected the US economy to spark a global recovery,” he said.
“The Singapore economy has been pretty resilient weathering the storm coming in from the eurozone by diversifying across a range of sectors including oil and gas, pharmaceuticals and electronics.”
On monetary policy, UOB’s Chow said the Monetary Authority of Singapore will likely keep its current gradual appreciation stance as the government sticks to its 1-3 per cent growth range this year.
“But the risks are biased towards looser monetary policy, in line with the easing bias we see in Asia currently,” Chow noted.
The MTI will release the preliminary GDP estimates for the second quarter in August 2012, including performance by sectors, sources of growth, inflation, employment and productivity, in the Economic Survey of Singapore.
| Monday, 16 July |
SG Earnings - M1 Ltd |
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SG Earnings - K-REIT Asia |
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SG Earnings - K-Green Trust |
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SG Earnings - AMG Bioenergy Resources Holdings Ltd |
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SG Ex-Div - Duty Free International Limited (SGD 0.01) |
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IN June Monthly Wholesale Prices (1430) |
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EC June Euro-Zone CPI (1700) |
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US June Advance Retail Sales (2030) |
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US May Business Inventories (2200) |
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| Tuesday, 17 July |
SG Earnings - Keppel Telecommunications & Transportation Ltd |
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SG Earnings - Ascendas Real Estate Investment Trust |
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SG June Electronic Exports (YOY) (0830) |
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SG June Non-oil Domestic Exports (0830) |
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UK June CPI (1630) |
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US June Consumer Price Index (2030) |
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US June Industrial Production (2115) |
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| Wednesday, 18 July |
SG Earnings - CapitaMall Trust |
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SG Earnings - Keppel Land Ltd |
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SG Earnings - TEE International Ltd |
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SG Earnings - Qian Hu Corp Ltd |
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SG Ex-Bonus - Second Chance Properties Ltd (Bonus warrant offer of 1 for 1) |
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SG Ex-Div - IEV Holdings Limited (MYR 0.007) |
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SG Ex-Div - Meghmani Organics Limited (INR 0.05) |
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SG Ex-Div - SMRT Corporation Ltd (SGD 0.057) |
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SG July Automobile COE Open bid (1600) |
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MA June CPI (1700) |
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IN June CPI |
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UK June Jobless Claims Change (1630) |
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US June Housing Starts (2030) |
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| Thursday, 19 July |
SG Earnings – AIMS AMP Capital Industrial REIT |
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SG Earnings - Frasers Centrepoint Trust |
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SG Earnings - Sabana Shari" ah Compliant Industrial Real Estate Trust |
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SG Earnings - Keppel Corp Ltd |
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SG Earnings - Mapletree Logistics Trust |
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SG Earnings - YHM Group Ltd |
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HK June Unemployment Rate (1630) |
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JP May All Industry Activity Index (MoM) (1230) |
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US July Initial Jobless Claims (2030) |
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US June Existing Home Sales (2200) |
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| Friday, 20 July |
SG Earnings – CapitaCommercial Trust |
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SG Earnings – OKP Holdings Ltd |
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SG Earnings – First Real Estate Investment Trust |
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SG Earnings – Aztech Group Ltd |
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SG Earnings - Suntec Real Estate Investment Trust |
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SG Earnings - Inno-Pacific Holdings Ltd |
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SG Earnings - Samudera Shipping Line Ltd |
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SG Earnings - Fortune Real Estate Investment Trust |
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CH MNI July Flash Business Sentiment Survey (0935) |
GLOBAL MARKETS-China GDP data lifts world stocks, crude oil
Graph with stacks of Australian dollars
* Commodities jump in relief rally after China GDP data
* Euro rebounds on speculation of major asset allocation shift
* Moody's credit downgrade of Italy had earlier pressured euro
* U.S. government debt prices fall
By Herbert Lash
NEW YORK, July 13 (Reuters) - Global stocks and oil prices surged in a relief rally o n F riday after Chinese data eased fears of a potential hard landing for the world's No. 2 economy and a further blow to growth worldwide.
U.S. stocks broke a six-day losing streak, and the euro advanced against the dollar for the first time in four days as risk sentiment broadly improved and investors covered bets against the currency.
Wall Street surged in the last hour of the session in light trading, just pushing the Dow and S& P 500 into positive territory for the week. The Nasdaq also rose but remained in negative territory for the week.
" There was a little bit of short-covering going into the weekend, accelerating to the upside, but on very light volume," said Douglas DePietro, a managing director at Evercore Partners in New York. " I don't think there's a whole lot to make of it, maybe a little bit of buy program out there."
A 7.6 percent reading of gross domestic product growth in China was a hair above the government's expectations, bolstering sentiment across the board in commodities and buoying equities.
The euro rebounded from a fresh two-year low plumbed earlier in the day, as investors sought to cover bets against the currency and risk sentiment broadly improved.
" The data out of China suggested that things are not all that bad, and that's giving a relief rally," said Randy Frederick, managing director of trading and derivatives with the Schwab Center for Financial Research.
" But I think the rally today is a lot stronger than it should be, and I don't expect this to continue for very long."
JPMorgan Chase & Co posted $4.4 billion of losses from its " London whale" trades and said it may incur $700 million to $1.7 billion in further losses.
But the bank's stock rose 6 percent to $36.07 as the trading losses cut second-quarter profit by only $471 million from a year earlier, to $4.96 billion.
JPMorgan's surge added the most points to the S& P 500, and lifted the banking sector by 3.26 percent.
Concerns about slowing growth have pressured risk assets in the recent past.
" The market was very oversold, so with China looking better than we previously thought, and JPMorgan looking like it has healed itself, things appear contained for the moment," said John Manley, chief equity strategist at Wells Fargo Funds Management in New York. " We're putting in a bottom, not a top."
Investors shrugged off a survey that showed U.S. consumer sentiment cooled again in early July to its lowest in seven months as Americans took a dim view of their finances and job prospects.
The Thomson Reuters/University of Michigan's preliminary reading on the overall index on consumer sentiment fell to 72.0 from 73.2 in June.
Separately, producer prices rose only slightly in June as energy costs dropped, suggesting inflation pressures remain muted. The Labor Department said seasonally adjusted producer prices rose 0.1 percent, a pace that leaves the door open for more efforts from the Federal Reserve to stimulate the economy.
The Dow Jones industrial average closed up 203.82 points, or 1.62 percent, at 12,777.09. The Standard & Poor's 500 Index added 22.02 points, or 1.65 percent, at 1,356.78. The Nasdaq Composite Index climbed 42.28 points, or 1.48 percent, at 2,908.47.
For the week, the Dow gained 0.04 percent, the S& P rose 0.15 percent but Nasdaq fell 0.98 percent.
European shares extended gains, with traders citing speculation of a shift in asset allocation as the jump in U.S. stocks helped the euro to rebound from a two-year low against the U.S. dollar.
The euro last traded at $1.2242, up 0.4 percent, rebounding from a mid-2010 low of $1.2160 hit earlier in the session.
The FTSEurofirst 300 rose 1.3 percent to close at 1,042.63.
" There is a major asset allocation switch out of Treasury long-end ETFs into European equities happening right now," said Justin Haque, a trader at Hobart Capital Markets.
The benchmark 10-year U.S. Treasury note was down 4/32 in price to yield 1.4893 percent.
The euro's rebound also changed sentiment on Italian government debt. Italian yields had jumped after a surprise ratings cut by Moody's highlighted the risk that the debt crisis could potentially engulf the euro zone's third-biggest economy.
Moody's warned it could further downgrade Italy's credit rating, now just two notches above junk status, if the country's access to debt markets dried up.
Commodities staged a mini relief rally as the Chinese GDP data was not as bad as some had feared.
Brent crude oil futures settled up $1.33 to $102.40 a barrel.
U.S. crude settled up $1.02 at $87.10 a barrel, and gained 3.1 percent for the week.
Gold rose, lifted by sharp rallies in equities and commodities, on the Chinese data.
U.S. gold futures for August delivery settled up $26.70 an ounce at $1,592. Spot gold prices rose 1.04 percent to $1,588.00.
The Reuters/Jefferies CRB Index of 19 commodities rose 1.27 percent to 293.96.
Oil market balance emboldens Iran's opponents: Campbell
(Robert Campbell is a Reuters market analyst. The views expressed are his own)
By Robert Campbell
NEW YORK, July 13 (Reuters) - Western diplomats can hardly believe their luck. Sanctions against Iran's oil exports are proving more effective than hoped yet the impact on the price of crude has so far been minimal.
It was not supposed to be this way. A decade of Iranian intransigence over its disputed nuclear program had finally eroded Western patience. Sanctions were supposed to be a painful, but necessary step.
Spurred by fears of a wider Middle Eastern conflict if Israel acted unilaterally to strike at Iran, Western governments decided to endure the consequences of tougher sanctions if they offered a peaceful route to resolving the issue.
But so far, the pain has mostly been inflicted on Iran.
Consider the situation in February after the European Union adopted its import ban. The International Energy Agency warned up to 1 million barrels per day of Iran's 2.6 million bpd of oil exports could be affected by tighter Western sanctions.
Brent crude had risen to a six-month high in early February, fueled by geopolitical worries, although the market was taking the looming sanctions impact " in its stride," according to the IEA.
Brent would later gain to nearly $130 a barrel, driven up by a combination of optimism over global economic growth and fears that this growth would drive up oil demand just as Iranian shipments withered.
But fears of a slowdown in global economic growth have sent the benchmark futures contract back down to near $100 a barrel, roughly where they were when Europe first publicly discussed a ban on imports of Iranian crude.
This result has been due more to luck than foresight. At the time the European ban began to be seriously discussed, Western governments believed a large release of strategic oil stocks would be needed to calm the oil market.
Now due to the global slowdown, and extra oil supplies from Saudi Arabia, the loss of some Iranian oil production has so far not affected the balance between crude supply and demand.
The benign situation could easily change, however. Oil traders are already nervous that the sanctions may working a little too well and flip the oil market into a supply deficit.
Restrictions on buying shipping insurance in European markets and stepped up measures by the United States against Iran's international financial transactions have greatly complicated Tehran's oil exports to major customers in Asia.
RISKS REMAIN
The current oil price scenario doubtlessly came into the equation as the United States weighed how tightly it would enforce its own sanctions regime.
If oil had been near $140 a barrel it is conceivable that Western governments might have overlooked some outlets for Iranian oil. After all, many market observers assumed earlier this year that supply and demand might only remain in balance if the West tacitly permitted Iran to export much of the crude it was not able to send to Europe.
Instead, as we saw last week, countries like Kenya find the sanctions complicating deals for Iranian crude.
Right now the risks to oil demand growth remain overwhelmingly on the downside. And the supply situation is forecast to be favorable.
A number of OPEC members outside of Iran will add new capacity next year. And non-OPEC oil production should move higher through 2013.
Little wonder the IEA's new 2013 oil market forecasts look fairly benign.
Global demand is seen averaging 90.9 million bpd, up 1 million bpd from 2012, but the amount OPEC will need to pump on average to balance the market should fall 400,000 bpd to an even 30 million bpd.
Moreover OPEC spare production capacity is expected to edge higher by 245,000 bpd as growth in other countries outweighs an expected 570,000 bpd decline in Iranian output capacity.
So far, so good, right? Next year should see Iran's influence over oil markets diminish while soft demand growth gives supply a chance to catch up.
This scenario assumes a great deal. Global oil demand does not have to grow much faster than expected to eat away at that modest gain in OPEC spare capacity.
Nor is this outcome so far fetched. Despite the global economic slowdown, the IEA's latest forecast for 2012 oil demand is identical to that published in February: 89.9 million bpd.
Fourth quarter demand has been revised down to 90.9 million bpd, but that is only 300,000 bpd less than the February forecast.
The same goes for supply growth. A few project delays or faster-than-anticipated decline rates could diminish the actual growth in global oil supplies.
A similar situation holds within OPEC. Although production capacity growth is expected from stable countries like the United Arab Emirates, Libya and Iraq are also expected to make large contributions.
But neither of the latter two countries can be described as politically stable. Unrest could force the postponement of new projects.
Nor can problems elsewhere in OPEC, or a bigger than expected fall in Iranian oil production be ruled out.
PAIN ONLY DEFERRED?
The problem with sanctions is that they are quite hard to lift. Once in place they become totems of prestige.
Look no further than the history of sanctions against Saddam Hussein's Iraq, which were in place for more than a decade and were no where near being lifted when the United States moved to topple the regime.
So too with Iran, I suspect. The West would pay a heavy diplomatic price if a surging oil prices forced a dilution of the sanctions regime.
However the impact of a lengthy standoff between Iran and the West will be the destruction of a large part of Iran's oil export capacity.
Without investment and modern technology, Iran's aging oil fields will struggle to sustain even the modest output expected in 2013.
Yet it is currently very hard to imagine a situation where the nuclear issue is resolved to the satisfaction of all parties, allowing a major boost in Iranian oil investment.
This may not be a problem now, but could easily become one if global growth shifts into a higher gears.
China Sees " Investment Surprise" Despite Slowdown, " Bearish Bias" Seen in Prices to Buy Gold
Dollar prices to Buy Gold rose to $1586 per ounce Friday morning in London, reversing losses from the previous two days - although gold remains more than 2% below where it was a month ago.
" Gold has been a range trade with a bearish bias given the progressively lower highs since late February," says the latest technical analysis from bullion bank Scotia Mocatta.
Prices to Buy Silver meantime climbed briefly above $27.50 per ounce Friday morning, as stocks, commodities and government bonds all ticked higher - with the exception of Spanish and Italian stock markets, which dipped following news of a ratings downgrade for Italy.
Heading into the weekend, prices to Buy Gold in Dollars were more or less unchanged on the week by Friday lunchtime in London, with Dollar Silver Prices up around 25¢.
Euro Gold Prices looked set for a 0.7% weekly gain, with the Euro/Dollar exchange rate dipping back below $1.22 this morning.
China's economy meantime grew at annual rate of 7.6% in the second quarter of the year, slowing down from 8.1% in Q1, official GDP data published Friday show.
" The expectation for weakness in the second quarter was pretty strong," says BNP Paribas economist Ken Peng in Beijing.
Fixed asset investment by state firms however showed a 13.8% annual increase in June - up from 10.0% a month earlier - while overall fixed investment growth ticked higher to 20.4%, up from 20.1% in May.
" The investment number is the surprise," says BNP's Peng. " There appears to have been a significant pick-up. That is [stimulus] policy beginning to work...we are looking for a small rebound in the third quarter and a bigger rebound in the fourth quarter."
China's central bank has twice cut interest rates in recent weeks.
" In China," says today's commodities note from Commerzbank, " bank deposits are likely no longer to be nominally profitable soon, following the recent reduction of the deposit interest rate by the central bank to 3%.
" We continue to regard gold as an attractive means of protecting one's capital against inflation...Negative real interest rates on the one hand and the high [inflation] risks on the other should lend support to the price of gold in the medium to long term."
China has overtaken India in recent months to become the world's biggest source of demand to Buy Gold.
Here in Europe, Italy managed to sell €5.25 billion of government debt Friday, despite being downgraded last night by ratings agency Moody's. The average yield on 3-year debt at today's auction was 4.65% - down from 5.3% paid last month at an auction of similar bonds.
A day earlier, Moody's downgraded Italy to two notches above junk, and one notch above Spain.
" Italy's near-term economic outlook has deteriorated, as manifest in both weaker growth and higher unemployment, which creates risk of failure to meet fiscal consolidation targets," a Moody's statement said.
" [This] in turn could weaken market confidence further, raising the risk of a sudden stop in market funding."
In Madrid, Spain's government could take control of budgets in regions that fail to meet deficit targets, Spanish budget minister Cristobal Montoro said Thursday. The national government may in return help regional governments to finance themselves, though Montoro denies this would take the form of jointly-issued debt.
" This idea of hispabonds in the sense of mutualizing risk has never been on table," said Montoro.
Germany's government last month agreed to underwrite regional debt, and from next year states could start issuing debt for which they and the federal government are jointly liable.
Here in London, the Bank of England and HM Treasury have launched their Funding for Lending scheme, which aims to increase lending by financial institutions to the " real economy" by up to £80 billion.
Gold Shines On Speculation China Will Push For Easing
Gold recapped yesterday's loss in the European session on Friday, but the metal is still set to post the second weekly decline on the back of a firmer U.S. dollar, which was supported by fading expectations that Federal Reserve will step up easing to bolster U.S. growth.
As of 11:03 (GMT+3), Spot gold was up 0.87 percent at $1,577.02 an ounce, compared with the day's opening of $1570.86, recording the an intraday high of $1577.69 and session low of $1565.86.
GDP figures from the world's second largest economy turned out to be the lucky numbers for the yellow shiny metal, giving it back a punch of flavor despite the ongoing pressures from the Fed's uncertain policy actions and Europe's debt crisis, boosting the dollar instead.
China’s growth slowed for the sixth quarter as trade and manufacturing pulled the brakes, adding pressures on the central bank to boost stimulus further in order to support growth in the second half of the year, after the bank cut the interest rates in particular.
The gross domestic product for the second quarter slowed to 7.6 percent, a three year low compared with 8.1 percent expansion during the first quarter, while analysts’ expectations were of 7.7 percent.
The outlook from the U.S. interest rates have quite tempered investor appetite for the yellow shiny metal and especially with emerging evidence of economic slowdown even in other large economies from China and 17-nation euro countries.
Despite morning gains, which remains apparently subdued, the yellow metal is struggling to retain its " safe haven" appeal, boosted in one hand by bullish bets of monetary easing from China, but hurt by strengthening U.S. currency on the other.
Moving to other precious metals, spot silver was up 1.01 percent at $27.38 an ounce. Spot platinum rose 0.76 percent to $1,425.59 an ounce. Spot palladium gained 1.22 percent to $581.75 an ounce.
Overall, global outlook marred by uncertainty amid growing signs the recovery is running out of steam will likely warrant the option of additional monetary stimulus in likely short manner and that should keep bullions as a good investment and in other words a safe haven.
Crude Oil Pushed Higher After More Sanctions On Iran, China's GDP
Crude oil rose from low levels after the U.S. tightened the belt on Iran with tougher sanctions yesterday. The commodity rebounded from low levels yesterday at $84.24 and continues this upside bias despite the Chinese data showed the slowest growth pace in China in three years.
Crude oil opened today's session at $85.73 and reached so far a high of $86.64 and a low of $85.57, where it is currently trading around $86.46 a barrel.
We still see a strong upside momentum pushing crude to the upside despite the Chinese data. However, investors were more pessimistic from the figures and expected a much slower pace in the second quarter. The current figures are weak raising speculations that the Chinese bank would step to stimulate the economy which may pick up next quarter especially after the bank cut interest rates.
Market analysis are expecting now that China should come out with further interest rate cuts or changes to the bank reserve ratio to stimulate internal growth as they must announce further easing monetary measures to halt the slowdown in the growth pace next quarter.
On the other hand, crude oil rebounded sharply yesterday from low levels after the Obama's administration sanctioned the National Iranian Tanker Co. (NITC) and four other companies for Iran's oil trade, as it would freeze American assets belonging to the tanker operator and block the company's transactions from the U.S. financial system.
These steps from the United States pushed crude oil sharply to the upside as they will raise the tensions between Iran and the west which will end, for now, to a closure for the Strait of Hormuz as Iran warned before after the EU embargo on Iranian oil started two weeks ago.
In another development, the debt crisis implications remain clear and fears are intensifying over the euro's outlook. Moody's flamed the tension again today after they slashed Italy's rating by two steps to remind investors that the crisis is far from bottoming out.
Volatility will be high today with the end of the week, where the current uncertainty may force investors to close their positions and get out of the market. The market will be looking for an answer from the Iranian side on these sanctions and how things are going to be in the coming period.
ICN.com
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Crude Oil Weekly Technical Outlook
Nymex Crude Oil (CL)
Crude oil drew some support from 4 hours 55 EMA and recovered last week. But upside is still limited below 88.98. Hence, initial bias remains neutral this week and some more sideway trading might be seen. Though, we're slightly favoring the case that fall from 110.55 is finished at 77.28. Hence downside of the retreat should be contained above 77.28 and bring another rise. Above 88.98 will target 90 psychological level first.
In the bigger picture, price actions from 114.84 are viewed as a three wave consolidation pattern with fall from 110.55 as the third leg. Such decline could have finished earlier than we expected at 77.28. Sustained trading above 90 psychological level will bring stronger rally towards 114.83 resistance level. And break there will resumption whole up trend from 33.2. On the downside, another fall cannot be ruled out yet. But even in that case, strong support should be seen below 74.95 and above 61.8% retracement of 33.20 to 114.83 at 64.38 and bring another medium term rise.
In the long term picture, crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2. The corrective structure of the rise from 33.2 indicates that it's second wave of the consolidation pattern. While it could make another high above 114.83, we'd anticipate strong resistance ahead of 147.24 to bring reversal for the third leg of the consolidation pattern.
Nymex Crude Oil Continuous Contract 4 Hours Chart
Nymex Crude Oil Continuous Contract Daily Chart
Nymex Crude Oil Continuous Contract Weekly Chart
Nymex Crude Oil Continuous Contract Monthly Chart
Gold Weekly Technical Outlook
Comex Gold (GC)
Gold's fall was contained well above 1547.6 last week and recovered. After all, it's still bounded inside range of 1547.6/1625.7. Initial bias is neutral this week for some more sideway trading. On the downside, break of 1547.6 will possibly bring a new low below 1526.7. But we'll be cautious on reversal signal again as it approaches 1500 psychological level. On the upside, above 1625.7 will target a test on 1642.4 resistance instead.
In the bigger picture, price actions from 1923.7 high are viewed as a medium term consolidation pattern. There is no indication that such consolidation is finished, and more range trading could be seen. In any case, downside of any falling leg should be contained by 1478.3/1577.4 support zone and bring rebound. Meanwhile, break of 1792.7 resistance is needed to be the first signal of up trend resumption. Otherwise, the consolidation would extend further.
In the long term picture, with 1478.3 support intact, there is no change in the long term bullish outlook in gold. While some more medium term consolidation cannot be ruled out, we'd anticipate an eventual break of 2000 psychological level in the long run
Comex Gold Continuous Contract 4 Hours Chart
Comex Gold Continuous Contract Daily Chart
Comex Gold Continuous Contract Weekly Chart
Comex Gold Continuous Contract Monthly Chart
