Singapore market – Dragged down by poor US economic number

• Singapore: Singapore market declined following a two day rally. Due to a lack of fresh buying leads, investors chose to lock in profits and wait at the sideline. This is despite the unexpected 10% increase in February factory output. Cues are still heavily dependent on US economic data. FTSE-STI down 4.97 or 0.2% to close at 2,995.22 points. Trading volume was 1.47 billion shares valued at S$1.57 billion and losers outnumbered gainers 370 to 253. Commodities supplier Olam International Ltd suffered a 14.1% lost to S$1.95 after its rating was cut to "sell" from "neutral" by Merrill Lynch.

• Wall Street: US market retreated after pessimistic numbers on February's durable goods orders. The Commerce Department released a 1.7% dip in last month's order for durable goods, which is indicative on business spending and consumer demand. This is its second consecutive shrink. Adding to worries, the Commerce Department also announced that sales of new homes slumped 1.8% in February, which dragged down sales for the fourth straight month to a 13-year low. Dow Jones slipped 109.74 or 0.9% to 12,422.86 points and Nasdaq dropped 16.69 or 0.7% to close at 2,324.36 points. However, crude oil soared US$4.58 to close at US$105.80 per barrel on NYMEX.

• Outlook: The mini-rally that started on Monday and moved the benchmark STI to the 3,000 level is likely to end earlier than our expectation. We have expected the market to rally towards the end of the week on expectation of better Singapore manufacturing number. True, the index for industrial productions has registered another month of double-digit growth, by 10% in February 2008 after growing 12.8% in January (see Chart). However, investors chose to remain at the sidelines pending further development in the US. Thus, the worst-than-expected US durable orders are likely to lead to some profit taking today. The US economy is probably in a recession now. However, the Singapore economy is expected to remain healthy, shown by the latest manufacturing numbers. With the backing of the Singapore economy, buy on weakness will still be the preferred investment strategy.


Company Highlights
SP Ausnet – Upgrades earnings forecasts
• SP Ausnet, a supplier of energy like electricity and gas, has guided an earnings increase for its 2008/09 financial year. Ausnet expects net profit to be about 15% higher than the forecast in its 2007 explanatory memorandum of A$147.5 million.

• Key reasons for the upward revision include the decision on transmission charges by the Australian Engery Regulators and also higher capital expenditure allowances. On top of that, Ausnet will also see reduction in its interest cost due to the refinancing of A$1.55 billion debt and finalisation of new interest rate hedges.

Asia Pacific Breweries Ltd – Invested US$1m to increase beer production in Vietnam
• Asia Pacific Breweries ("APB"), leading brewery group in the Asia Pacific region, has invested some S$1.4 million to increase production capacity at its wholly-owned brewery in Hatay, located outside Hanoi in North Vietnam.

• Hatay Brewery can now produce 460,000 hectolitres of beer, up 50 percent from its initial capacity. The plant brews beer under the labels Tiger, Heineken, Anchor and Bivina.

• APB says Vietnam is a key part of its business in Indochina. The region is now APB's largest profit generator, accounting for 48% of pre-tax profit and 37% of revenue in FY07.

• APB's operations in Indochina comprise five breweries in Vietnam, one in Cambodia and one in Laos, which was officially opened two weeks ago.