AIO Finance Analysis

Expect the market to follow the US forth quarter economic data out this week.
-December Factory order
-Retail Chain Index
-ISM Services
-4Q Productivity
-4Q Unit labor cost
-Jobless claims
-December Consumer Credit
-December Wholesale inventories

For exact date of the result (Read More...)
Source: Steady Bull

1 Ms Mirriam MacWilliams does not subscribe to the belief of investing in stocks with falling prices or buying them at their rock-bottom prices. It is the worst time to buy because you have no idea why the prices are falling, she said. Only fund managers are able to do that because of the sheer number of stocks they control.

2 Never rush in to buy the stocks. “I prefer the stocks to give me a
direction; once I have a direction, I apply entry and exit parameters,” she advised. “Always have a trading plan.”

3 Take note of the time horizon or percentage move on the stock. For example, if you are in a three-week trade window period, you may want to aim for a 10-per-cent move on the stock. If the window period is around three or four days, you would expect the stock to move
about 5 per cent.
4 She has this advice for short-term investors: “You just need to
understand certain criteria in the US stock market such as the price movement of the stock and the number of the stocks. “As long as you understand the criteria for investing, you don’t have to get so worried
about economic fluctuations.” Long-term investors looking at a window period of one to two years should “keep their eyes on the pulse of the
interest rates in the US”.

5 Be a consistent trader. Do something over and over again that yields you good return and eliminate all the pitfalls for that risk.

6 All-time high prices are risky. Do not get too emotional when prices escalate or decline.

7 Know that fund managers will go in the opposite direction of the masses. When the market is bullish and everyone is getting in, they are getting out, and vice versa.

Source: MyPaper

Asian stocks are likely to fall after a late downturn on Wall Street, and amid jitters over Japanese corporate earnings, as several companies, including Sony Corp report on Thursday.

Markets like India, which slid on uncertainty over the U.S. Federal Reserve's next move, could rebound after the Fed cut rates by 0.5 percent following last week's emergency 0.75 percent cut.

Australian shares set the tone for Asia, sinking as much as 2 percent in early trade on Thursday, led down by banks and the market's biggest retailer, Woolworths Ltd.

In Japan, investors knocked banks on Wednesday after reports that Mizuho Financial Group might inject an additional $1.9 billion into its unit Mizuho Securities to shore up the brokerage hit by bad subprime investments. Sharp falls for key Hong Kong and Taiwanese stocks, like Sinopec and UMC, on Wall Street pointed to weaker openings for Taiwan and Hong Kong.

Asian stocks listed on Wall Street .BKAS fell 0.8 percent, while MSCI's measure of Asian stocks excluding Japan .MIAPJ0000PUS slid 1.86 percent.

As expected, FED cut its rates again ~ FED funds rate to 3% and Discount rate to 3.5%. Stock rallied as soon as FED announced they cut its rates but the rally was short lived.

Is it because wall streets has rallied for the past 2 days and price already factor in the rate cuts? Or maybe jobless rate (will be announced on Friday)will give us a hint that recession is on sight????

Goldman tells investors to sell S'pore banks

Call comes after key index drops 22 per cent from Oct peak. Investors should sell shares of Singapore's DBS Group Holdings Ltd and its two rivals on expectation the banks' earnings growth will moderate, Goldman Sachs Group Inc said.

It's 'time to take profit, not bottom fish' after the city-state's lenders have fallen about 20 per cent from late last year, Goldman's Singapore-based analyst Tan Bok Chuan said in a report dated Jan 27.
The analyst made his recommendation after the FTSE Strait Times Financials Index, whose 55 members include DBS, United Overseas Bank Ltd (UOB) and Oversea-Chinese Banking Corp (OCBC), Singapore's three banks, dropped 22 per cent from a peak in October.
Any share price gains triggered by interest rate cuts by the US Federal Reserve would present selling opportunities, he said.

'While the macro outlook for Singapore remains resilient despite an expected mild US recession, we are less sanguine on the Singapore banks' earnings outlook,' Mr Tan said.

Yesterday, DBS closed 88 cents or 4.6 per cent down to S$18.06. UOB fell 58 cents or 3.2 per cent to S$17.50, while OCBC fell 20 cents or 2.6 per cent to S$7.60.

The FTSE Strait Times Financials Index fell 3.3 per cent yesterday.
Goldman is keeping a 'neutral' call on the city's three banks.
Mr Tan said declines to S$14.50 for DBS and S$15.50 for UOB would represent buying opportunities.

Investors should buy OCBC when it falls to S$6.80, he added.
Of the three banks, OCBC, owner of Singapore's biggest life insurer, is the city-state's 'most defensive' banking stock, Mr Tan said.

'We like OCBC for its defensive qualities: adequate CDO (collateralised debt obligation) provisions in our view with minimal exposure to the US monoline bond insurers,' Mr Tan said in a report.

OCBC said in November last year that it took a S$221 million 'allowance', or charge, on its asset- backed securities, writing down the value of the investments linked to US sub-prime mortgages to S$48 million as of Sept 30.

The bank has a CDO portfolio of S$641 million.
CDOs are securities that pool loans, bonds or credit- default swaps and use the income to pay investors.

The securities are divided into different parts of varying risk and return.
OCBC is also benefiting from declining interbank loan rates in Singapore, which means the cost of funding its loans is shrinking, Mr Tan said.

Singapore's three- month interbank rate fell to a three-year low on Jan 25, 6.25 basis points to 1.5625 per cent yesterday, data compiled by Bloomberg showed.

A basis point is 0.01 percentage point.

The bank may report net income of S$2.11 billion for 2007, 13 per cent higher than Goldman's earlier forecast, Mr Tan said.
Profit may fall to S$1.98 billion this year, still 14 per cent more than his previous estimate, Mr Tan said.

DBS, South-east Asia's biggest bank, is the 'most at risk operationally', while UOB, Goldman's least favoured of the three Singapore lenders, 'continues to struggle to grow its regional franchise', the Goldman analyst said.

Source: Bloomberg

The Bulls will not surrender. At least for the time being.

Hang Seng Index: 24053.61 (-1068.76)
Nikkei Index: 13087.91 (-541.25)
ST Index: 3041.06 (-118.42)

Well, everyone might think that I am being cynical based on the ironic results we had in the Asian session today. Hang on. Allow me to elaborate.

If you all had been observant enough, volume was relatively thin today, especially ST Index with only 1.3 bln trade volume done, a turnover of approximately $1.6 bln. What does this signify ? Bears are exhausted. Is it a deliberate move by the BBs to push down the markets so that they can buy cheap? I won't rule out this possibility but I might be wrong too.

Anyway, let's move on. Dow Jones is looking good now and it seems like a victory day for the bulls once more as investors are anticipating a 0.5% basis point cut from the Fed, not forgetting Europe had also recovered from a huge gap down following a disappointing Dow's performance yesterday.

Rule of Thumb:

Never trust futures. They are only indicative, lagging and not definite. Can only be taken as reference. Markets are dynamic creatures, like a chameleon. Any slight broadcast of news would move the futures and no one is able to predict what will happen next, unless you are GOD.

I firmly believe that markets will make another U-turn tomorrow, with the contest between the Bulls and Bears continues. But this time the Bulls will triumph. Well, at least for another two days, prior to the much awaited Federal meeting.

Oh ya, one more time i forgot to mention. Did I ever mention Gold was the current safest bet ? I think i did. It's currently trading at $927 an ounce, up from a comparative value of about $874 an ounce traded, mentioned on 23th Jan's post. If you are a Gold futures' expert, you will know what I mean.

Enough about Gold. If Dow really closes GREEN tonight, Yangzijiang will be a good buy. Cheers !!

China Oilfield bid to enter Russia fails

Russia has rejected a bid by China Oilfield Services Ltd to buy a unit of TNK-BP, smothering what would have been the Chinese firm's first acquisition abroad at the final hurdle and sending its shares 12 percent lower.

State-owned China Oilfield, the drilling and equipment arm of top Chinese offshore oil producer CNOOC Group, had agreed to buy oil services firm STU from TNK-BP for more than $10 million, making its maiden foray into the world's No. 2 oil exporting country.

China Oilfield had expected the Russian deal to be finalised last April. It had already won Beijing's blessing and obtained approval from both companies.

China Oilfield now views Russia, the Middle East and the Gulf of Mexico as strategic markets it needs to explore. It already maintains a presence in Southeast Asia.

But if it eventually wins entry into Russia, it will still lag Western oilfield services giants such as Schlumberger Ltd and Halliburton Co , which have bought into local independents and now control about a third of the Russian service sector. Russian oil majors and independents each hold a third.

China Oilfield Chief Executive Yuan Guangyu told Reuters last August that the company was in advanced talks to buy another foreign firm, in a deal that would dwarf the STU transaction.

I don't think they have the scale to buy any listed company. If they do look it's probably going to be private smaller companies

The firm has operations in more than 10 countries and derived 18 percent of its revenue from abroad in the first half of 2007. It aims to raise that share to 30 percent by 2008.

Singapore-listed China stocks rally after signing of QDII investment agreement

Chinese stocks that are traded in Singapore rallied Thursday after the Monetary Authority of Singapore and the China Banking Regulatory Commission signed an agreement to allow Chinese banks to offer their clients investment opportunities in Singapore under China's qualified domestic institutional investor (QDII) scheme

"I think they (Chinese investors) should find it quite attractive to invest in Singapore. Chinese companies listed here are the cream of the crop since they adhere to stricter listing rules," said Kim Eng Securities analyst Gregory Yap

While this should be positive, Yap said he is not expecting an immediate dramatic impact since China plans to sign similar accords with securities regulators in US, Germany and Japan. So far, China has signed QDII pacts with Hong Kong and the UK

UBS also doubts that Chinese banks will rush to buy shares in Singapore

"This is hardly an environment for a rush of Chinese banks' funds into the Singapore market. Having said that, this will likely be a short term catalyst for a big bounce in oversold S-chips (Chinese stocks listed in Singapore)," said UBS research head Tan Min Lan in a note to clients Among big cap Chinese stocks, Tan said she believes that Cosco Corp Singapore, Yangzijiang Shipbuilding, sports shoemaker China Hongxing and Synear Food are oversold considering these shares have fallen between 40 and 50 percent in the last three months. At 12.15 pm (0415 GMT), the FTSE ST China index was up 8 percent at 568.67. The index was introduced on January 10 by the Singapore Exchange as part of a revamp of local stock market indices. The index represents 50 out of the more than 100 Chinese stocks listed in Singapore

Shipbuilder and shipping company Cosco was up 12.4 percent at 4.72 Singapore dollars, Yangzijiang was up 10.4 percent at 1.38 dollars, China Hongxing was 12.7 percent higher at 71 cents and Synear Food was up 15.2 percent at 1.21 dollars

Mobile phone maker Longcheer Holdings rose 14 percent to 48.5 cents

Value Buys

Lately, I've been asked by many people whether it is a good time to buy stocks now, and if so, which stocks would be worth buying.

But before I go into that, I feel that I should state this disclaimer:

The sub-prime crisis currently faced by the American economy is very, very real, and so is the threat that it could potentially send the U.S. into a recession, and the rest of the global economy along with it.

If that were to happen, then we would experience a situation whereby stock prices would be falling lower over the next few years.

If you believe that the above scenario is more likely than not, then obviously it would be better to completely stay away from stocks for the next few years until the recession has done its damage.

In which case, you should probably stop reading from here and ignore the rest of this post. (Read More...)

Source: Extraordinary Profits

Biosensors

Singapore's Biosensors International said on Friday it has received regulatory approval to sell its heart stents in Europe, and expects a return to profitability in the second half of its 2009 financial year.
The loss-making medical equipment maker has been waiting for its CE Mark since April 2005. The mark will enable Biosensors to sell its BioMatrix drug-eluting heart stent in Europe. A heart stent is an expandable mesh-like medical device that is inserted into a clogged artery and used as a scaffold to keep it open.

"With this approval we received, BioMatrix will be available in Europe and parts of Asia," said chief executive Lu Yoh-Chie in a conference call with reporters.

The firm, which in November posted a net loss of $3 million for its half year fiscal 2008, expects higher revenue from the heart stents to return it to profitability in fiscal year 2009.

"We believe in the first half we would continue to make losses, but in the fourth quarter or second half we will be in a position to break-even or even turn a profit," Lu said.

Kevin Sayer, the firm's chief financial officer, said total revenue for 2009 is expected to come in at around $100 million to $115 million, with revenue from heart stents contributing almost half.

The firm, which has been expanding in Asia, will start marketing its BioMatrix heart stent in China in 2010.

Chua Kee Lock, the company's president, told Reuters in an interview in September that Biosensors was looking to penetrate India, Taiwan and South Korea within the next 12 months. The firm bought over a Chinese medical company earlier this month.

Biosensors, with a market cap of $765 million, competes with healthcare giants such as Johnson & Johnson and Abbott Laboratories Inc .

Lu said he was not ruling out a takeover.

"Everything is possible, we do not rule out any possibilities going forward," Lu said.

Shares in Biosensors were suspended from trade on Friday. The stock has outperformed a weaker Singapore benchmark index to gain 15 percent so far this year, after it underperformed and ended 2007 little changed.

Source: Reuters

Wilmar falls on China price intervention

Shares of Wilmar International tumbled as much as 8.4 percent to S$4.45 with 5.9 million shares traded on news that Chinese regulators would limit the plantation firm's ability to raise prices on their edible oil products.

"There is increasing pressure on Wilmar to subsidise the Chinese consumers and absorb part of the higher raw material cost," Merrill Lynch analyst Han Lim Chong said.

Merrill Lynch said in a client note that while there was continuing upside potential to the stock given high crude palm oil prices, the risks to the firm's downstream margins have "risen significantly".

China on Wednesday issued a list of producers of daily necessities that must apply for government permission to raise prices, fleshing out a cabinet decision last week to begin direct market intervention to curb inflation.

Source: Reuters

DBS Vickers Report

Stay cautious this week, as the market is likely to continue its downward bias. The play on recent IPO listings has waned while S-chips could suffer more downside amid concerns about margin pressures as investors unwind.

The impact of the credit crisis on the corporate earnings of US financial companies will be accessed. Expect financial companies to announce more losses stemming from their exposure to mortgage-related investments.

Citigroup releases results on Tuesday, JP Morgan Wednesday and Merrill Lynch on Thursday. The releases of December US PPI and CPI will also shed more light on inflationary pressures given the weakening USD.

(Read More...)

Source: Extraordinary Profits

Commercial REITs

I got interested in Commercial REITs after reading in The Edge and learnt that Allco Commercial REIT was selling at a discount. If we agree with the concept of buying at discount, then AllcoComReit would have been a bargain! Wanting to find out more, I began what was to become a study into the financials of the various Commercial REITs listed in SGX.

Commercial REITs or Office REITs are essentially business vehicles deriving income from operation of office spaces. In my opinion, REITs are useful for being able to deliver stable income returns to investors, with potential to deliver on valuations upside, and commercial REITs are no exception.

My search reveal that there are altogether five Commercial/Commercial-retail REITs listed locally.

(More...)

Source: Million Dollars Dream

Giant Write-Down Is Seen for Merrill

Merrill Lynch is expected to suffer $15 billion in losses stemming from soured mortgage investments, almost double its original estimate, prompting the firm to raise additional capital from an outside investor.

Eric Thayer/Reuters
John A. Thain, the chief of Merrill Lynch, is urging change.
Times Topics: Sovereign Wealth Funds

Merrill, the nation’s largest brokerage firm, is expected to disclose the huge write-down when it reports earnings next week, according to people who have been briefed on its plans. The loss far exceeds the $12 billion hit many Wall Street analysts had forecast.

To shore up its deteriorating finances, Merrill is now in discussions with investors in the United States, Asia and the Middle East, including American private equity firms, to raise about $4 billion in the coming days, these people said.

The developments underscore the rising toll that the mortgage crisis is taking on many once-proud Wall Street banks. In recent months Merrill and several other firms have grabbed financial lifelines from wealthy foreign governments. Further investments by so-called sovereign wealth funds could prompt scrutiny by Congress.

The latest moves at Merrill come as John A. Thain, who became the company’s chairman and chief executive in December, struggles to bolster the firm’s capital, burnish its reputation and avoid the toxic internal battles that have hurt the firm in the past.

Mr. Thain, who won plaudits as head of the New York Stock Exchange, has wasted little time. After he took over last month, Merrill Lynch promptly sold a $5.6 billion stake to Temasek Holdings, which is controlled by the government of Singapore, and Davis Selected Advisers, a money management firm based in Tucson.

During a meeting in December in London, Mr. Thain told anxious employees that Merrill expected further losses after an $8.4 billion write-down in the third quarter. He also said the firm would require additional capital. He said the fourth quarter would be a “very bad quarter,” those attending recalled.

Mr. Thain has made clear that Merrill would not sell its 49 percent stake in BlackRock, the global money management firm. But he has said that Merrill is considering selling noncore assets like its stake in Bloomberg, the financial news and information company founded by Mayor Michael R. Bloomberg of New York. In a research report, Brad Hintz, a securities analyst at Sanford C. Bernstein & Company, said that stake was worth about $4 billion.

Mr. Thain also said at the London meeting that Merrill’s management style needed to change. Recalling his days as a co-president of Goldman Sachs, Mr. Thain said that he wanted employees to build consensus.

Among other things, that means Merrill will now pay fewer bonuses based on individual performance and instead focus on the performance of a team. Many employees received bonuses this week that included a greater portion of stock than in the past.

Merrill is hardly alone in seeking capital from overseas. United States financial institutions have raised more than $29 billion from foreign governments and their related investment entities, according to the market research firm Dealogic.

In recent months, the Government of Singapore Investment Corporation, Singapore’s lesser-known government fund, invested $9.7 billion in UBS; Citigroup sold a $7.5 billion stake to the Abu Dhabi Investment Authority; and the China Investment Corporation poured $5 billion into Morgan Stanley.

If a foreign government takes another big stake in Merrill, Congress might ratchet up its scrutiny of sovereign wealth funds, which have ballooned thanks to rising oil prices and booming emerging markets.

On Thursday, SenatorCharles E. Schumer, Democrat of New York, expressed concern about the amount of money American financial institutions are contemplating raising from sovereign wealth funds.
“Foreign investment, in general, strengthens our economy and creates jobs,” Senator Schumer said. “Because sovereign wealth funds, by definition, are potentially susceptible to noneconomic interests, the closer they come to exercising control and influence, the greater concerns we have.”

So far, none of the foreign investors that have bought into United States banks have sought management roles. “All have been very consciously structured to be passive,” said H. Rodgin Cohen, chairman of Sullivan & Cromwell, who has worked on a number of these deals. “None have asked for directors.”
In addition to seeking funds from outside investors, which heavily dilutes the stakes of existing shareholders, Merrill Lynch has sought alternative ways to raise capital. In December, it agreed to sell most of its commercial finance business, Merrill Lynch Capital, to General Electric, raising about $1.3 billion in equity.

Mr. Hintz, the securities analyst, suggested another option would be to reduce the firm’s fixed-income business by a third, which would add about $3 billion in capital.

He estimates that Merrill will write down its $27 billion of combined collateralized debt obligation and subprime-related exposures by $10 billion and report a loss of $5.10 a share for the fourth quarter. Any write-down above $20 billion, he said, would “significantly increase leverage and would threaten the credit ratings of the firm.”

During the London meeting, Mr. Thain said that Merrill would have to build its presence in China as well as expand its principal investing businesses, including private equity, commercial real estate and infrastructure.

(Link...)

Source: new york times

JEL Corp

The latest scandal to hit the stock market belongs to JEL Corp, which was suspended in September 2007 following news that SGX suspected something was wrong with their reporting and financials. The CAD were called in and KPMG was appointed as the independent forensic auditor to investigate into the affairs of the company (the usual procedure). Needless to say, SGX had to suspend trading in the counter as it would not create a "fair and orderly" market.

Now, on January 8, 2008, the auditors have issued their audit report and it's not a pretty picture. Basically, the gist of it is saying that there were deliberate attempts to falsify documents, create fictitious invoices (hence boosting revenues), use creative accounting entries to reduce expenses (hence inflating profits) and non-disclosure of related party loans. The main culprits which were named include Mr. Eric Tan (former Chairman), Mr. Eric Leow (Director) and Mr. Wee Teck Han (CFO). After reading the KPMG report, I must say it's quite appalling how these "irregularities" have…

(More...)
Source: Value Investment

New Revamped STI Index

The new revamped STI index will be launched tomorrow.
The new index will be slimed down to 30 stocks. Some notable companies that have been removed include Creative Technology, Venture Corp and Chartered Semiconductor, either for failing to meet the minimum market cap requirement or because their shares were not sufficiently liquid over the past year. It comes at no surprise as the electronics sector once the pillar of our economy growth is now past its prime. In their place come two hugely popular China stocks - Yangzijiang Shipbuilding and property firm Yanlord, together with SIA Engineering and commodities/palm oil firm Wilmar International.

New STI Index

(More...)

Source: The Finance

Well, Look What The Cat Dragged In

"We are not considering any other deals and will continue pushing the partnership with Singapore Airlines," said Li Fenghua, president of China Eastern after the vote at a special meeting. In November, Singapore Airlines and its parent, Temasek Holdings, signed definitive agreements with China Eastern to take a 24% stake in the carrier worth HK$7.2 billion or HK$3.80 per share.

The battle between Air China's (0753) parent China National Aviation Corp(CNAC) and Singapore Airlines over SIA's potential partnership with China Eastern Airlines (0670) took a new twist yesterday after China Eastern shareholders voted against the deal.

The deal was voted down yesterday with 77.61% of attending minority shareholders going against it. Altogether, 75% of H-share and 94% of A-share voting power opposed the deal.

Source: Malaysia Finance