Warrants Highlight

Strong Order Flows as Crude Oil Heads towards $100

Crude oil prices have rallied more than 20% since the sub-$80/barrel levels in late June. The The NYMEX Light crude closed at $95.9/barrel yesterday, just 4% away from the psychological level of $100. The recent weak Chinese data has prompted speculation for more stimuli which in turn may drive up its energy demand.

Recently, we have seen healthy building and services order flow in the Offshore and Marine (O&M) sector. The following are some of the Macquarie warrants over O&M companies

Ezion – Surged past $1.00 on North Sea contracts
Before Ezion went on trading halt on 9th Aug, it was trading below $1.00 for more than 3 months. The announcement of its US$80mn charter contract and US$88mn letter of intent to provide a services in the North Sea boosted Ezion’s shares above the $1.00 level. Its shares closed at $1.07 yesterday, gaining 62% year-to-date.

STX OSV – Fincantieri deal still pending?
Earlier this year, it was reported that STX Group is planning to sell off its 50.75% stake in STX OSV, the world’s biggest maker of offshore support vessels. One of the bidders is said to be Italian luxury ship builder Fincantieri. The management has yet to announce any updates on the deal.

Share takeover aside, STX posted a strong order intake last quarter at NOK 5bn. This boosted its 1H new order intake to its highest since 2007 at NOK 7.3bn. It paid out a hefty special dividend of $0.13 (7.9%) last Tuesday.

Keppel & SMM – More coming after Brazil?
The billion-dollar Brazilian contracts have been the key driver of the Keppel Corp and Sembcorp Marine shares since their bidding last year. Now that the deal has been confirmed, investors are looking for further catalysts. The duo did not disappoint, with Keppel announcing US$1.2bn worth of contracts in August, while SembMarine secured a US$135mn order.

Singapore Market Wrap

Monetary easing coming soon?

With the release of the FOMC minutes last night, investors were hopeful that the Federal Reserve will ease monetary policy. As a result, Asian markets were optimistic and both the STI and HSI gapped up at the start of the trading session.

The minutes released Wednesday night seems to suggest that easing will come soon unless data show a sustainable recovery in the economy. The Fed will be focusing on the country's unemployment rate, which has been above 8% since 2009.

In China, the PMI figures were disappointing, staying below 50. Last month's PMI was at 49.3, while this month's dropped to 47.8. However, investors saw it positively, speculating that the China's central bank will loosen monetary policy amid the weak PMI.

The STI closed at 3056.37, up 0.2% dod, while the HSI closed at 20132.24, up 1.2% dod.

STI 3100MBeCW121031 (Q1AW) exercise level 3,100.*
STI 2950MBePW121031 (Q0ZW) exercise level 2,950.*

HSI19800MBeCW120927 (Q1DW) exercise level 19,800.*
HSI20400MBePW120927 (Q1SW) exercise level 20,400.*

Yangzijiang posts highest operating margins in second quarter
Yonhap, South Korea's largest news agency, reported that "Chinese shipbuilders logged higher margins in the second quarter of this year than their South Korean rivals as they built higher-priced ships ordered before the 2009 financial crisis".

Chinese shipbuilder Yangzijiang, based in China's eastern coastal province of Jiangsu, had the highest operating margin of 28.5%, as majority of its orders were won before the end of 2009, the company said.

The news agency said that "the trend is expected to continue this year but South Korean shipbuilders are forecast to overtake their Chinese rivals in terms of operating income margin starting in 2013".

Yangzijiang outperformed the index, closing at $1.02, up 1% dod.

Call warrant YangzijiMBeCW130102 (O9LW) exercise price $1.20.*
Put warrant YangzijiMBePW130103 (Q0CW) exercise price $ 0.95.*

SingTel introduces NFC technology
Yesterday, SingTel announced that it has introduced a mobile payment service for smartphones using Near Field Communication (NFC) technology with EZ-link. This technology will allow users to make purchases at places which accept ez-link payments.

This service comes free without additional monthly subscription as long as customers have a NFC smart phone and a NFC simcard. The EZ-link mobile application will be available in the google play store for android mobile handsets.

SingTel was one of the leaders in the STI, closing at $3.30, up 0.6% dod.

Call warrant SingTelMBeCW130301 (PB6W) exercise price $3.30.*

Overnight Market Wrap

Worries over EU crisis overshadow hopes of a QE

The positive remarks from the policy makers in the last FOMC failed to buoy markets as the US indices ended in the red. The S&P closed at 1402.08, falling 0.8% dod.

US investors disregarded the FOMC minutes as they were more concerned that the European leaders have made little progress in solving their crisis. German chancellor Angela Merkel said that "Europe is in one of its deepest crisis and the road to recovery is long and arduous" but the region will recover stronger than before. Greece, requested for more time to meet debt obligations but allowing that will increase cost for creditors. Adding on, the European Union mentioned that it is focused on its aid program for Spain banks and hasn't received a request for a full bailout of the European region.

The region also released its PMI figures and it comes as no surprise that figures were below 50, showing a contraction in the economy. The Eurozone reported PMI at 46.6, in line with the analysts estimates.

In the US, jobless claims rose, signalling that there is little progress in the jobs market and this contributed to investors' worries. The Bloomberg survey expected claims of 365,000 but actual claims were higher at 372,000. On the other hand, housing situation seems to be improving as new home sales rose 3.6% to a 372,000 annual rates.

Overnight Markets

Indices	Last	Change
STI	3056.37	0.2%
HSI	20132.20	1.2%
DJIA	13057.50	-0.9%
S&P 500	1402.08	-0.8%
Nasdaq	3053.40	-0.7%
China A50	7236.76	0.1%

Corporate News

Corporate Announcements

Results announcements:
Tue 28 Aug: Olam 4Q12

Ex-dividend dates:
Thu 30 Aug: Sakari ($0.02), UOB ($0.20)
Wed 26 Sep: SGX ($0.15)