STI - Lack of pullback at 2750 points to 2840 before pulling back.
O&M - Benefiting from oil price recovery, interest in SCI spilled to Keppel Corp and now, SMM, Ezion and Pacfic Radiance
STI index changes - Noble to be replaced by CapitaLand Commercial Trust
The counter trend rally continued yesterday with the STI ending at 2787. Based on Fibonacci projection, the lack of a pullback off 2750 suggests that the index should extend its gains towards the next near-term resistance at 2840 before pulling back.
Meanwhile, we see room for O&M stocks to gain further ground in the near-term as oil price firms further. Technically, Brent (currently at USD37pbl) has upside potential to USD39pbl at least. SembCorp Industries, our preferred pick for the sector had lead gains. The positive sentiment spilled to Keppel Corp and interest in SembCorp Marine as well as OSVs Ezion and Pacific Radiance has just started to pick up. SembCorp Marine is a 'pure upstream' O&M play, it is a more direct beneficiary oil price increase.
\Attention turns to US February non-farm payrolls tonight. Consensus expects a figure of 195k, an improvement over the previous month's reading of 151k.
FTSE Russell announces that there will be one change to the constituents of the Straits Times Index, following the March quarterly review. CapitaLand Commercial Trust will be added to the Index, while Noble Group will be removed. All constituent changes take effect at the start of business on 21 March 2016 and the next review will take place on 2 June 2016. The indexes are reviewed half-yearly in accordance with the index ground rules and reviewed quarterly to fast-track the inclusion of eligible IPO stocks.
The management of Mapletree Greater China Commercial Trust (MAGIC) highlights Hong Kong Festival Walk's resiliency during its recent non-deal roadshow (NDR) in Kuala Lumpur. Further growth is to be driven by Sandhill Plaza in Shanghai, as rents are below market rates. MAGIC is on the lookout for acquisitions; focusing on decentralisation trend, i.e. specifically the shift of offices out of the CBD. Maintain BUY, TP S$1.11.
Standard & Poor's Ratings Services had raised the long-term corporate credit rating on Yanlord Land Group's outstanding senior unsecured notes to 'BB-' from 'B+'. The outlook on the corporate credit rating is stable. In line with the upgrade, S&P also raised the Greater China regional scale long-term ratings on Yanlord and its notes to 'cnBB+' from 'cnBB'.
Ryobi Kiso Holdings had secured a total of S$33.3m worth of contracts since 1 Jan 16 to date. The Group's net order book as at 31 Dec 15 stood at $135.3m.
US Fund manager Franklin Resources has become a substantial shareholder of Sembcorp Marine after its two funds - Templeton International and Templeton Worldwide - bought S$1.82m in additional shares in the yard group on March 2. In a regulatory filing, Franklin Resources said it has raised its total deemed interest to 5.03% from 4.97% after the funds snapped up 1.15m shares in all. The purchases bring the average price of a share to S$1.58.
Source: DBS