Towards Financial Freedom
DBS Equity Research: Wired Daily 8 Jun 2015
STI - Downward drift to 3270-3300 before bottoming out
SMRT not exercising option to invest in OMGTEL
We do not rule out the STI drifting lower to 3270-3300 level this month before bottoming out. While the STI has fallen 217pts since the mid-April high of and is a mere 28pts above its 13x (-0.5SD) 12-mth forward PE, we hesitate to call an immediate inflexion point. External uncertainties such as shifts in timing to US rate hike expectations, concerns about Greece's ability to repay €1.6bil by month's end and the spill over effect of a more volatile China equity market can result in market choppiness in the near-term. Technical indicators are also mixed and the STI has dipped below a support level at 3350.
Index heavyweights SingTel, banks and Jardine Group were the main index shakers to the downside since the STI turned down from mid-April. A rebound in the STI off the anticipated low at 3270-3300 should be likely led by these index component stocks, especially banks and SingTel.
SMRT says it won't exercise option to subscribe for shares in OMGTEL Pte. Instead, the Company will continue to place its investment focus on business areas such as in rail engineering where the Company has an active interest.
Koyo International Limited has been awarded two contracts ("Contracts") of approximately S$17.3mil for the proposed additions and alterations to mechanical, electrical, and plumbing services at the Ngee Ann Polytechnic campus and the maintenance of mechanical and electrical systems in one school zone under the Singapore Ministry of Education. These two contracts bring Koyo's gross order book to-date S$41.0mil.
IPS Securex Holdings Limited has received a purchase order for the supply of the PepperBall brand of non-lethal countermeasure technology products worth USD4mil.
US stocks fell as investors weigh the likelihood that the FED will start raising rates later this year after May non-farm payrolls came in better-than-expected at 280k (consensus 226k). This led the vice chairman of the FOMC to say it is likely that conditions will be appropriate to begin monetary policy normalization later this year. Futures show a 50% (from 43%) chance the Fed will start raising rates by its October meeting, according to CME Group. May's unemployment ticked up to 5.5% as more Americans entered the labour force looking for work. The 10-year treasury yield rose to 2.41% from 2.3%. Meanwhile, energy stocks rebounded as oil price edged higher.
Source: DBS
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