Singapore market – Market advances further

• Market Preview: Straits Times Index (STI) secured another 23.31 or 0.8% gain to 2,949.54 points after Dow's overnight increase with Warren Buffett's rescue plan for the troubled bond insurers. Buffett's offer to reinsure up to US$800 billion in municipal bonds has brought about certain level of reassurance to investors. Trading volume went up 1.7 billion shares valued at S$1.8 billion. Gainers led losers 346 to 304. Property giants saw bigger gains following recent heavy sell-down. CapitaLand up 18 cents or 3.2% to S$5.86 while Keppel Land added 12 cents or 2.1% to close at S$5.89.
• The market is likely to cheer the improvement over the US economic outlook rather than the slight downgrading of Singapore outlook. As Singapore is an open economy, its performance will depend on external economies. As such, market is likely to react more positively to a better US numbers. Going forward, we may see more mixed US numbers. Investors who have acted on our accumulate call earlier may consider taking some profit.
• In this morning's Singapore 4Q07 GDP release, the Ministry of Trade and Industry (MTI) has lowered the 2008 Singapore GDP forecast by half a percentage point to 4%-6%. The 4Q07 GDP growth rate grew at year-on-year rate of 5.4% (see Table), slightly lower than the 6% reported in the advanced estimate. Manufacturing sector achieved a lower growth rate of 0.2%, lower than the fresh estimate growth rate of 0.5%. Construction sector's performance was inline with the fresh estimate, growing at 24.3%. Finance sector was the second best performing sector, growing at 15.9%. Overall, the Singapore economy grew at 7.7% in 2007, better than the fresh estimate of 7.5%. This was due to adjustment in prior quarters' numbers. Despite MTI's downgrading, we keep our GDP forecast for 2008 at 4.8% as we have already factored in a negative 1% growth in the manufacturing sector. We believe the strong construction and business services sectors are likely to power the economy in 2008.

• Wall Street: US shares moved up sharply on unexpected increase in retail sales figures last month. The Commerce Department announced a 0.3% rise in January retail sales, beating analyst's expectation of a 0.3% decline. The surprise increase lifted some of the market's worries that consumers are not willing to spend in this uncertain economic where fuel prices are rising and real estate sector experiencing a downfall. Dow gained 178.83 or 1.4% to 12,552.24 while Nasdaq grabbed of 53.89 or 2.3% to 2,379.93 points. Applied materials, the largest maker of semiconductor equipment, closed 10.2% higher at US$19.91 after it reported a surge in orders for machines that make flat screen.
• Crude Oil rose US$0.49 to close at US$93.27 per barrel on NYMEX.

Company Highlights


Australand- FY07 operating profit after tax up 5% to S$163.2 million
• Australand Holdings Limited announced a FY07 net profit of S$269.2 million, including unrealized gains in property revaluations while the full year operating profit after tax, excluding unrealized gains in property revaluations, was S$163.2 million, up 5% on the prior year.
• Earnings per Stapled Security, on operating profit after tax, was up 2% to S$17.6 while dividends up 3% to S$0.17 per stapled security.
Rotary Engineering – seals US$62 million deal
• Rotary Engineering announced that it is increasing stake in its joint venture company, Petrol Steel Co. Ltd. in Saudi Arabia to 51%.
• The joint venture has secured a US$62 million deal with Saudi Kayan Petrochemical Company to construct 24 tanks. Work is due to commerce and is expected to be completed by end of the year