Warrants Highlight

Obama's win fails to inspire equities

This week saw the end of the US elections with President Obama winning four more years in the White House. This was despite the US unemployment rate remaining high at 7.9% although recent economic data has shown green shoots of recovery.

Largest two-day loss in a year
In the first two US trading sessions right after the re-election, US equity markets nose-dived with the S&P 500 Index falling below 1400 for the first time in more than 2 months. In fact, the index fell 3.6% in two days, which was the biggest single two-day decline in a year. After the elections, investors turned their focus towards the looming ‘fiscal cliff’ that involves spending cuts and tax increases that will threaten to push the US back into recession.

Divided US Congress
The US election has resulted in a divided congress with the Democrats in control of the Senate and the Republicans in control of the House of Representatives. This divided government has prompted concerns over the automatic kick starting of spending cuts and tax increases in January if the situation does not change by 31 Dec.

The Democratic party is led by President Obama while the Republicans hold a significant majority in the congress. As an illustration of opposing views, President Obama was insistent about raising the marginal-income tax rates on the top 2% of Americans during his campaign, which was a proposal that faced rejection from the Republicans.

Greece bites the austerity bullet
Greek’s Prime Minister, Antonis Samaras garnered enough support from lawmakers to secure the approval of austerity measures needed to unlock bailout funds. The new bill which includes spending cuts and tax hikes, was marginally approved with 153 votes in favour out of the 300 seat parliament.

Samaras said in a statement that “Greece today took a great, decisive and positive step” and that “the vote was a condition that will create jobs for our children, for all of Greece to see better days. The next step is budget, which will also go well”.

The Eurozone finance ministers will meet next Monday in Brussels to make a final decision on whether to release the next tranche of bailout funds to Greece.

Asian stocks sold off as well
With concerns over their European and US counterparts, Asian stocks were largely sold off yesterday with the regional benchmark index falling 1.3%. The HSI, China A50 and STI fell 2.4%, 1.4% and 1.0% respectively.

China’s Communist Party started their congress meeting yesterday to choose their new leaders as well as to discuss new policies. The meeting is expected to last till mid next week.

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

Wed 14 Nov: US Producer Price Index, retail sales; Eurozone Industrial Production
Thu 15 Nov: US Consumer Price Index, minutes of FOMC; Eurozone CPI
Fri 16 Nov: US industrial production, HK GDP
 

Singapore Market Wrap

Post Presidential Election shows harsh reality

US markets tumbled on Wednesday night after the announcement of Obama's re-election, with renewed focus on US' impending fiscal issues. Regional markets were affected as well. Major markets such as the HSI plunged 2.41% with Japan's Nikkel falling 1.51%. The STI reached an intraday low of 3002.77 before eventually ending the trading session down 1.02% to 3012.25.

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

Ezra secures contracts worth US$200 million
Ezra announced that it secured 2 contracts worth around US$200 million from major South Korean clients. Ezra will be providing engineering, procurement, construction, installation and commissioning of systems for the contract which will commence immediately. The other contract, commencing in the first quarter 2014, will involve supplying it's accommodation and hook-up support vessels. Ezra dropped 0.45% to close at $1.10 for the trading session.

Call Ezra MBeCW130603 (Q8EW) exercise price $1.172.*

Noble Group's record revenue
Noble has reported record Group revenue of US$69.8 billion for the nine months 2012, increasing 15% year-on-year. Its three months revenue stands at US$22.7 billion with net profit of US$75.2 million. Record operating income from supply chain had a 31% increase quarter-on-quarter and total operating income after profit on supply chain assets was US$1,188 million. Noble dropped 1.54% to $1.275 day-on-day prior to the earnings release.

Call NobleGrpMBeCW130201 (Q5OW) exercise price $1.40.*
Put NobleGrpMBePW130201 (Q8YW) exercise price $1.25.*

Overnight Market Wrap

S&P, largest two-day fall in a year

The S&P continued to slide yesterday, falling 1.2% to close at 1337.51. This brings the index down 3.6% over two days, which is the largest fall for the year according to Bloomberg.

The Congress Budget Report issued a report yesterday, reaffirming that the projections of tax increases and spending cuts due to take effect next year will lead to a recession in the first half of 2013. The ‘fiscal cliff', however, would not take place if the House can compromise on other ways of deal with the budget deficit.

In Europe, investors worried about whether Greece would receive the next pie of their bailout after a European Union Official said that the Eurozone finance ministers will await a full report about compliance in Greece.

Overnight Markets

Indices	Last	Change
STI	3012.25	-1.0%
HSI	21566.90	-2.4%
DJIA	12811.30	-0.9%
S&P 500	1382.49	-0.9%
Nasdaq	2898.54	-1.3%
China A50	7175.90	-1.4%

Corporate News

Corporate Announcements

IHH Healthcare announced the acquisition of a subsidiary Turuncu Grup Saglik Hizmetleri Danismanlik Insaat Ticaret A.S, a provider of healthcare services. The acquisition is not expected to have a material effect on the earnings ending 31 December 2012.

Earnings release dates:
Fri 9 Nov: SembCorp Industries (3Q12)
Fri 9 Nov: OCBC (3Q12)
Fri 9 Nov: Wilmar (3Q12)
Mon 12 Nov: Genting (3Q12)
Mon 12 Nov: ComfortDelGro (3Q12)
Mon 12 Nov: Golden Argi (3Q12)
Wed 14 Nov: GLP (2Q13)
Wed 14 Nov: City Dev (3Q12)
Wed 14 Nov: Midas (3Q12)
Wed 14 Nov: Singtel (2Q12)
Wed 14 Nov: China Minzhong (1Q13)
Wed 14 Nov: Olam (1Q13)
Wed 14 Nov: STX OSV (3Q12)

Ex-dividend dates:
Fri 7 Dec: SPH ($0.17)