Warrants Highlight

Singapore's GDP may remain suppressed next year

Macquarie is listing a new STI warrant (R2AW) with a lower strike this morning.

Macquarie’s Straits Times Index warrants

GDP unexpectedly contracts by 5.9%

Last week, the Singapore government warned that the economic growth for the rest of the year will be subdued and the next year may not be that much better. GDP contracted by 5.9% in the third quarter compared to the same period last year, economists were expecting a 2.9% contraction.

According to the Ministry of Trade and Industry (MTI), the main reason for the unexpected contraction was because of electronics manufacturing. The sector tapered off 17.2% due to a decline in private sector building activities.

Previously, the MTI forecasted economic growth to be at 1.5-2.5% for the whole of 2012, but now it expects growth to be at the bottom of its forecast at 1.5%. Looking at 2013, the MTI expects economic growth of 1 – 3% due to the sluggish global economy which may keep external demand weak. It said that “if the fiscal cutback in the US and the potential escalation of ongoing debt crisis in the Eurozone were to materialise, Singapore’s economic growth could come in lower than expected”.

The International Enterprise (IE) Singapore echoed what MTI said and lowered their estimates for trade growth. Growth estimates for 2012 has been revised down 1% from its previous forecast of 4 – 5%. In 2013, trade growth is expected to be higher between 3 – 5%.

Investment remains strong

Despite the slowdown in the Singapore’s economy, Trade and Industry Minister Lim Hng Kiang said that the pipeline of investments coming into Singapore remains strong. The country has very high hurdles for investments thus there are instances when proposals had to be turned down.

A strong investment flow is a double-edged sword for Singapore, as on one hand it creates very good jobs, yet on the other hand it does not help with the job restructuring process. Mr Lim said, “As Singaporeans go for better jobs, those jobs which are lower paying and less value-add will find that they cannot continue in Singapore”.

Singapore Market Wrap

See-saw trading day

Wednesday's STI drifted between positive and negative territory to mirror the lacklustre reaction of Tuesday's US market. This was despite Tuesday night's better than expected October housing starts in the US climbing to a four-year high. The market is now likely awaiting further important economic data releases such as the US unemployment claims as well as the its consumer confidence sentiment. The STI eventually rose marginally 0.05% to 2960.30 day-on-day (d.o.d).

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

Olam rebounds as war of words escalate
Olam rebounded 5.28% to $1.695 on Wednesday's session after it tanked 7.5% on Tuesday. Muddy Waters had initially questioned Olam's accounting method before Olam hit back stating that the claims were "baseless" and "without merit". The latest salvo came when Muddy Waters updated their website in response to Olam's statement, re-emphasising their stand.

Call OLAM MB eCW130201 (Q4MW) exercise price $2.00.*

NOL buys US customs brokerage and trade compliance firm
NOL's subsidiary in US has acquired Carmichael International Service, a Los Angeles-based Customs brokerage and trade compliance firm. The deal is worth US$37 million, with the net asset value of Carmichael at approximately US$3.7 million on the close of 19 November 2012. NOL slipped 0.47% to $1.06 for the trading session.

Call NOL MB eCW130604 (Q8FW) exercise price $1.30.*

Overnight Market Wrap

S&P gains for 4th consecutive day

Yesterday, Israel and Palestinian militant group Hamas agreed to cease-fire on the week's attacks after talks brokered by Egypt's Islamic leaders.

Meanwhile in the US, economic reports showed that fewer people filed for unemployment benefits. Jobless claims were at 410,000 last week, down 41,000 from the previous week. In addition, consumer sentiments in November were little changed compared to October. The S&P closed up 0.2% after the good economic releases.

In Europe, indices fell in the earlier portion of the trading session when Eurozone finance ministers were unable to agree on a debt plan for Greece. Fortunately, losses were reversed and the Euro Stoxx 600 added 0.2% for the day.

Overnight Markets

Indices	Last	Change
STI	2960.30	0.1%
HSI	21524.40	1.4%
DJIA	12836.90	0.4%
S&P 500	1391.03	0.2%
Nasdaq	2926.55	0.3%
China A50	7012.74	1.4%

Corporate News

Corporate Announcements

Olam has initiated legal action in the High Court of Singapore against both Muddy Waters, LLC and Carson Block.

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