Signs of optimism seen globally

kimeng

Publish date: Fri, 19 Oct 2012, 12:51 PM

Warrants Highlight

Signs of optimism seen globally

A week after the International Monetary Fund warned of a global slowdown, the US bucked the gloomy outlook by announcing a string of impressive economic data and corporate earnings from American companies that beat initial estimates.

Code	Name	Type	Expiry	Exercise Price
RB1W	HSI21000MBeCW121129	Call	29-Nov-12	21000
RC7W	HSI21600MBePW121129	Put	29-Nov-12	21600
Q4OW	STI 3250MBeCW121231	Call	31-Dec-12	3250
Q4PW	STI 3100MBePW121231	Put	31-Dec-12	3100
QP3W	CN8500MBeCW121129	Call	29-Nov-12	8500
QP5W	CN7500MBePW121129	Put	29-Nov-12	7500

US corporates impressive indeed
Last week, spectacular employment data sparked green shoots of optimism that the world’s biggest economy might be heading for a recovery. This week, the announcements of positive economic data continued to support risk sentiments.

A series of data releases were welcomed, firstly with consumers starting to spend more as seen from the unexpected increase of 1.1% in retail sales for the month of September. This was followed by industrial production beating Bloomberg analysts’ estimates by increasing 0.4%. On Wednesday, housing figures continued to surprise on the upside. Housing starts increased 15% month on month (mom), the highest in 4 years. In addition, building permits also shot up, increasing 11.6% mom.

It was a different situation before earnings season started, where investors were worried that numbers might disappoint given the global slump. However, the disappointment has largely not materialized with many renowned US names performing better than expected. Out of all the companies that have reported earnings, more than 70% outperformed estimates.

Europe still has its work cut out
With the focus on US, Europe seemed to take a backseat early this week, nevertheless the region was not entirely without any movement. Yesterday, European leaders met for 2-day summit in Brussels to try and solve differences over a unified banking union.

A banking union is the first stage in a four-pronged strategy to overhaul the monetary union and prevent a future crisis. Initially, the plan of having a single banking supervisor was estimated to be ready by Jan 2013. However, the timeline seems to be tall order, Joerg Asmussen, Germany’s representative on the ECB’s executive board said that it is “more important to do it properly than to do it quickly”.

Lying deep within their agenda for the EU summit, is to discuss plans and make decisions on helping Cyprus, Greece and Spain. However, officials said that plans may “only come at a finance ministers’ meeting next month”. As Greece creditors leave Athens to brief leaders in Brussels, they said that “Greece had agreed to most of the cuts and reforms needed for fresh aid” and the Greek prime minister said he was confident of a deal soon.

China bottoming out?
Like the US, China has also showed encouraging signs of a pickup in activity, with industrial production, retail sales and fixed asset investment advancing in September. These came after speculations that the economy in China is “bottoming out”, whereby an improvement in the Chinese economy could help dampen the chances of a stimulus from the government.

Key Macro Data this week
Below are the dates for key macro data released this week.

Mon 22 Oct: HK CPI
Tue 23 Oct: Eur consumer confidence, Singapore CPI
Wed 24 Oct: US new home sales, Eur PMI, China HSBC flash manufacturing PMI
Thu 25 Oct: US FOMC, HK trade balance, Singapore industrial production
Fri 26 Oct: US GDP

Singapore Market Wrap

Sea of green

China's GDP rose 7.4% in the third quarter from a year earlier, providing a possible catalyst for the Asian markets. China A50 index rose 1.4% to 7397 with the STI also ended in the green to close at 3060.36, a 0.48% increase day on day.

Call STI 3100MBeCW130131 (PA7W) exercise level 3,100.*
Put STI 2800MBePW130131 (PA8W) exercise level 2,800.*

SGX profit falls
Sluggish trading led to a decline in profits for SGX. 1st quarter net earnings fell 15% despite greater trading volume from mergers and acquisitions companies such as F&N, Thai Beverage and Asia Pacific Breweries. Prior to the release of its earnings report, SGX closed marginally higher at 0.15% to $6.85 for the day.

Call SGX MB eCW121203 (Q0LW) exercise price $7.50.*
Put SGX MB ePW121204 (Q4TW) exercise price $ 6.60.*

Ezra's EOC bags contract
EOC Limited, an associate company of Erza, has clinched a US$15 million contract from Premier Oil Vietnam Offshore for the upgrades on a subsea tie-back link. EOC will provide project management as well as engineering and procurement services. Premier Oil Vietnam Offshore is a wholly owned subsidiary of UK-headquartered Premier Oil plc, a leading independent exploration and production company in the offshore sector. Ezra dropped 1.27% to $1.17 for the trading session.

Long Dated Call Ezra MBeCW130603 (Q8EW) exercise price $1.20.*

Overnight Market Wrap

Technology sector biggest drag on S&P for a second day

After IBM and Intel missed estimates on Wednesday, internet giant, Google was due to report their third quarter earnings after market hours yesterday.

However, they prematurely announced their surprisingly weak numbers during the trading session. Google's profits missed analysts' estimates by 15% and the company's shares fell as much as 10.5% before trading was temporarily halted. Fortunately, it recovered slightly after the halt and ended down 8% for the day. Still, it was the biggest drag on the S&P index and the technology sector performed the worst out of all the 10 sectors in the index.

Fortunately, the 7 out of 10 sectors in the S&P posted gains for the day and the index lost 0.2% to close at 1457.34.

Overnight Markets

Indices	Last	Change
STI	3060.36	0.5%
HSI	21518.70	0.5%
DJIA	13548.90	-0.1%
S&P 500	1457.34	-0.2%
Nasdaq	3072.87	-1.0%
China A50	7396.87	1.4%

Corporate News

Corporate Announcements

EOC Limited, an associate company of Ezra, has clinched a US$15 million contract from Premier Oil Vietnam Offshore for the upgrades on a subsea tie-back link.

Wilmar and Archer Daniels Midland Company International Limited have announced that they have completed regulatory approvals for their partnerships in global fertilizer and European vegetable oil.

Earnings release dates:
Wed 17 Oct: Ascendas REIT (2Q13)
Wed 17 Oct: Kepland (3Q12)
Thu 18 Oct: SGX (1Q13)
Thu 18 Oct: Keppel Corp (3Q12)
Fri 19 Oct: CapitaMall Trust (3Q12)
Tues 23 Oct: Mapletree Industrial Trust (2Q13)
Thu 25 Oct: NOL (3Q12)
Thu 25 Oct: CapitaCommercial Trust (3Q12)
Thu 25 Oct: CapitaMalls Asia (3Q12)
Tues 30 Oct: Capitaland (3Q12)
Thurs 1 Nov: DBS (2Q12)
Fri 2 Nov: SIA (2Q12)
Mon 5 Nov: SembCorp Marine (3Q12)
Wed 7 Nov: UOB (3Q12)
Wed 7 Nov: Biosensors (2Q13)
Thurs 8 Nov: Noble (3Q12)
Fri 9 Nov: SembCorp Industries (3Q12)
Fri 9 Nov: OCBC (3Q12)
Fri 9 Nov: Wilmar (3Q12)
Fri 14 Nov: GLP (2Q13)
Fri 14 Nov: City Dev (3Q12)

Ex-dividend dates:
Tue 6 Nov: Olam ($0.05)

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