The Great Singapore (& Global) Sale Has Started

kimeng

Publish date: Tue, 15 May 2012, 11:08 AM

Warrants Highlight

The Great Singapore (& Global) Sale Has Started

Code	Name	Type	Expiry	Exercise Price
QE8W	STI 2950MBeCW120831	Call	31-Aug-12	2950
QE9W	STI 2850MBePW120831	Put	31-Aug-12	2850
P8BW	STI 3000MBeCW120629	Call	29-Jun-12	3000
P8CW	STI 2900MBePW120629	Put	29-Jun-12	2900

The growing list of reasons
The global second quarter sell-down has continued into May with more bad news besetting markets. According to preliminary data from the Investment Company Institute, U.S. equity mutual funds recorded US$18 billion of outflows in April, the most since at least 1984.

In America, the lack of confidence and trust amongst investors following news of JP Morgan’s US$2bn trading loss fails to entice significant buying interest, causing the Dow to close at its lowest level since January last night.

In Europe, fears of a Greek exit from the euro grows more and more real each day as Greece’s political deadlock extended into a second week after President Papoulias failed to secure an agreement on a unity government and as German Chancellor Angela Merkel’s party was defeated in Germany’s most populous state in an election that helped the Social Democrats tighten their grip. The German Social Democrats are for an anti-austerity approach, similar with France’s new President Francois Hollande. The escalating tensions in Europe were little helped by the cost of insuring against a Spanish default jumping to an all-time high.

The fear is also manifested via the Chicago Board Options Exchange Volatility Index (VIX), otherwise popularly known as the fear index as it measures the cost of using options as insurance against S&P 500 losses. The VIX rose 10 percent overnight to an almost four-month high.

Here in Singapore, the STI closed at its lowest since January 10, at 2,864.12 yesterday, with losses in the second week of May alone totalling 3.8% and quarter-to-date loss to 4.9%. Yesterday, only 10% of the index constituents on STI finished above their 20-day moving average (versus 17% on Friday), and 17% of the shares above their 50 day moving average(versus unchanged on Friday).

Taking a view on Singapore market via STI warrants
Investors who wish to take a view on the STI without the need to stock pick may consider trading STI warrants. Investors anticipating a rebound on the Singapore stock market can take a leveraged exposure with STI call warrants, while bearish investors can consider shorting the index via STI put warrants.

Singapore Market Wrap

China RRR Cut Failed to Support STI

Over the weekend, the Chinese government cut banks' reserve requirement ratio (RRR) by 50 basis points to boost the economy. However, the move failed to keep Asian indices from sliding yesterday. The STI fell 0.7% day-on-day (dod) to 2,864.12.

Call STI 2950MBeCW120831 (QE8W) exercise level 2,950.*
Put STI 2850MBePW120831 (QE9W) exercise level 2,850.*
Longer-dated Call STI 3100MBeCW130131 (PA7W) exercise level 3,100.*
Longer-dated Put STI 2800MBePW130131 (PA8W) exercise level 2,800.*

Yanlord hit $1.00, CapitaLand at $2.65
China property developer, Yanlord (-4.3% dod, $1.00), slid for the 8th day to the psychological level of $1.00. The stock hovered around $1.05 for most of the day before a last hour sell of took away almost all of its 2012 gains. After markets, Yanlord reported a 49.4% year-on-year decline in net profit to RMB135.6mn.

CapitaLand fell 2.9% dod to $2.65. Singapore's National Development Minister, Mr Khaw Boon Wan, said in parliament yesterday that the government is monitoring the trend of shoebox units in Singapore. The government may introduce measures to regulate such apartments as developers sold a record number of such apartments.

Call Yanlord MBeCW120801 (O8XW) exercise price $1.15.*

Call CapitalaMBeCW120903 (P0ZW) exercise price $2.582.*
Put CapitalaMBePW121004 (P5OW) exercise price $2.979.*

STX OSV surged ahead of earnings
STX OSV surged 4.4% yesterday to $1.55, despite a market wide sell-off. After markets, the offshore support vessels builder reported a 13% decline in net profit to NOK 269mn. There has been speculation that the parent, STX Group, may name the preferred bidder for its stake in STX OSV very soon.

Call STXOSV MB eCW120801 (P2VW) exercise price $1.80.*
Call STXOSV MB eCW121002 (P8KW) exercise price $2.00.*

Overnight Market Wrap

Global Stocks Fell on Monday

Both European and US indices fell yesterday, with the S&P500 falling 1.1% to 1,338.35. Financials and Oil & Gas sectors were the worst performers. News flow continued to focus around the Greece political stalemate and JP Morgan's trading loss.

Gold fell 1.4%, below its Jan 2012 levels. Crude oil futures are now trading at $94.78 per barrel, compared to around $103 per barrel last month.

Overnight Markets

Indices	Last	Change
STI	2864.12	-0.7%
HSI	19735.04	-1.1%
DJIA	12695.35	-1.0%
S&P 500	1338.35	-1.1%
Nasdaq	2902.58	-1.1%

Corporate News

Corporate Announcements

STX OSV's 1Q12 net profit came in at NOK 269mn, a 13% drop from the previous year.

Yanlord's 1Q12 net profit came in at RMB 135.6mn, a 49% drop from the previous year.

Bumitama Agri said 1Q12 net profit was a 1.3% increase from the previous year to IDR 189bn.

Results Announcement
Tue 15 May: Olam 3Q12
Tue 29 May: Biosensors 4Q12

Ex-Dividend Date
Tue 15 May: Noble Group (US$0.0165)
Thu 17 May: Yangzijiang ($0.055)

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