Warrants Highlight

Strong outlook for Singapore's O&M

The offshore and marine (O&M) sector outperformed yesterday, with the sector adding 0.3% day-on-day (dod) as a whole. Ezra +4.5% dod, Ezion +4.7% dod, Keppel Corp +0.4% dod and Sembcorp Marine flat for the day. In contrast, the Straits Times Index declined 0.2% dod.

Offshore and marine sector maintained by growth in Asia
Late last year, Singapore’s Second Minister for Trade and Industry, S. Iswaran said that the outlook for the country’s offshore and marine sector will remain resilient even with the unstable global economic situation. This is backed by a robust oil and gas sector, which the offshore marine industry is highly dependant on.

“The outlook for the marine and offshore sector continues to be positive, buoyed by continued growth in Asia. China and India remain key growth engines and will likely account for half of the global increment demand for energy from 2011 to 2020. Projections indicate that from 2011 to 2016, Asia’s energy demand will drive Asian companies to invest about $29 billion on deepsea exploration, drilling and production. This is more than double the $12 billion spent from 2007 to 2011.” Mr Iswaran said.

Singapore, a key player in the sector
During the keynote speeches of the Singapore Maritime Institute (SMI) Forum conducted on 29th November last year, it is reported that Singapore has built about 70% of the world’s jackup rigs and more than 50% of the semisubmersible rigs since 2000. Customers come to Singapore because of the country’s reputation of efficiency; consistently delivering products of high quality in a safe and timely manner.

Mr Iswaran noted that the turnover for the offshore and marine sector was at $13.3 billion in 2011 as compared to $13.5 billion in 2010.

However, he acknowledges that given Singapore’s resource constraints and increased competition globally, industry players in the country will have to find new ways to boost productivity. Although Singapore-based shipyards are the industry leaders in the floating, production, storage and offloading (FPSO) sector and own two thirds of the world’s FPSO contracts, Chinese shipyards have started emerging as a strong competitor.

Still, Singapore is responding well to the competition through ways like improving processes and optimizing labour. Therefore, Mr Iswaran is optimistic about the order books going forward.

Singapore Market Wrap

The STI starts the week in cautious tone

The STI slipped 0.2% to 3,218.3 on Monday as it broke a 3 day winning steak. Investors were cautious as the earnings season looms. A pre-budget survey by the Singapore Chinese Chamber of Commerce & Industry of 176 companies showed that the Singapore's business community is more doubtful of this year's outlook compared to 2012.

Call STI 3250MBeCW130430 (R5XW) exercise level 3,250.*
Put STI 3100MBePW130430 (R5WW) exercise level 3,100.*

SGX hit new highs for derivatives and commodities volumes
While securities turnover fell 12.0% in 2012 to S$321.5 billion, the volume of derivatives hit a new high of 80.2 million contracts for the year. China A50 futures volume tripled last year as bond listings reached a three-year high of S$183.1 billion. SGX remained flat at $7.10 for the day.

Call SGX MB eCW130502 (RE5W) exercise price $7.20.*
Put SGX MB ePW130502 (RD5W) exercise price $ 6.50.*

URA to review policy on property developers
The Urban Redevelopment Authority (URA) is set to review and correct the policy that allows developers to sell off free spaces, which in the process allows them to make additional profits. National Development Minister Khaw Boon Wan is concerned that as more developers build larger private roof terraces and private enclosed space, communal space that benefits all residents will shrink. CapitaLand rose 1.3% to $3.85 day-on-day.

Call CapitalaMBeCW130704 (R5YW) exercise price $4.00.*
Put CapitalaMBePW130903 (R5TW) exercise price $3.50.*

Overnight Market Wrap

S&P falls below its five-year high

Last night, the S&P index fell 0.3% to close below its five-year high. Utilities, energy and consumer staple companies led the decline, slumping 0.7% as a group. The US earnings season will start after market hours tonight.

In Europe, the Eurostoxx 600 closed 0.4% down even though European banks did well. A gauge of banks advanced 1.8% after regulators relaxed the conditions for banks to meet their liquidity coverage ratio. Like the US, energy and consumer staple contributed the most to the decline in the index.

Earlier in its session, Eurostats announced that the Eurozone producer price inflation inched down 0.2% in November. This leaves room for interest rate cuts from the central bank. The European Central Bank will meet on Thursday.

Overnight Markets

Indices	Last	Change
STI	3218.26	-0.2%
HSI	23329.80	-0.0%
DJIA	13384.30	-0.4%
S&P 500	1461.89	-0.3%
Nasdaq	3050.39	-
China A50	8436.63	0.4%

Corporate News

Earnings release dates:
Mon 14 Jan: SPH (1Q13)
Fri 18 Jan: CapitaMall Trust (FY12)
Tue 22 Jan: MapleTree Industrial Trust (3Q13)
Tue 22 Jan: SGX (2Q13)
Wed 23 Jan: Keppel Land (FY12)
Thurs 24 Jan: Keppel Corp (FY12)