Last Updated: 1:40am BST 26/05/2008
George Soros, 'the man who broke the Bank of England', tells Edmund Conway of his fears for the economy
'This is a period of wealth destruction. The people who make money will be few and far between. There will be a lot more money lost than made." When George Soros - the phenomenally successful hedge fund manager - says this, you know something is wrong, very wrong. And indeed it is. The 77-year-old billionaire sinks back into the sofa in his Chelsea townhouse and exhales.
He has managed to make money almost consistently for over half a century - from his early days as one of the world's first major hedge fund traders to his involvement in Black Wednesday as the man who "broke the Bank of England", and in the latter years generating multi-billion-dollar annual profits throughout the 1990s. The conditions today are almost uniquely dismal, however.
"I think this is probably more serious than anything in our lifetime," he says. In short, his feeling is that the United States and Britain are facing a recession of a scale greater than the early-1990s, greater even than the 1970s.
"I think the dislocations will be greater because you also have the implications of the house price decline, which you didn't have in the 1970s - so you had stagflation and transfer of purchasing power to the oil producing countries, but here you also have the housing crisis in addition to that."
· The financial crisis in full
Such apocalypticisms would be less worrying were it not that Soros was among the few prominent experts who warned of the dire consequences facing the American economy years ago, when the housing bubble was still inflating.
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But even cottoning on to the big economic story early on hasn't meant guaranteed success. He returned from retirement last summer, and no sooner had he started trading than he pulled hundreds of millions of dollars of investment out of the US and the UK. It was enough to help him to a 32pc return last year. But amid the turbulence of 2008, he admits he is barely breaking even.
One of the problems is that leverage, the juice that has driven the hedge fund and finance trade in recent years, has all but dried up; the other is that the impending economic slump will be far-reaching and painful.
In the UK, the economic clouds are particularly dark, he says. "House prices have risen over the years and are further away from sustainable than in practically any other country, in terms of household indebtedness and the relationship of house prices to incomes." The slump may be more gentle than in the US, he adds, but it will be more drawn out.
"This is going to be compounded by the fact that the financial industry weighs more heavily on the economy than in other countries, because London is the centre of the global financial system, and you have the unfortunate condition that the Bank of England is bound into inflation targeting, and is not in a position to lower interest rates until you have an economic slowdown."
The nice decade, he says, borrowing a phrase from Bank Governor Mervyn King, is over and now the Bank has struck a "Faustian bargain between economic slowdown and inflation".
Ah, the Bank of England. There can be few more eventful relationships between one man and a bank than this one. There is no doubt he remains proud of his central role in Black Wednesday, when he helped drive Britain out of the Exchange Rate Mechanism, making around a billion dollars in the process. He is reminded of it by the fact that sterling has recently fallen some 20pc against the euro.
"It's much better than the straitjacket sterling was in when I broke the Bank of England."
For which, by the way, he is, rightly, unapologetic: "The ERM would have been abandoned even if I had never been born."
The son of the ERM, meanwhile, the euro, looks unbreakable in comparison - by speculators, at least.
But as hedge funds and other speculators pile in to the current crude oil boom, the Hungarian-born investor instead focuses on the wider picture - maintaining his estimated $8.5bn (£4.3bn) fortune, much of which he spends on his philanthropic and political ventures - most notably his Open Society Institute, which has a particular focus on Eastern Europe. However, don't try to read any of his politics into his trades, he insists.
"As a hedge fund manager, I do not claim to be serving the public interest. I am in the business to make money," he says. "It's a difficult point for people to understand and there's a general attitude when they see people profiting to say that markets are immoral, or making money by speculating is immoral.
"It's really the job of the authorities to set the rules, and there are times when some people break the rules or engage in improper activities, like the sub-prime mortgages. The impact fell particularly heavily on black and Hispanic minorities.
"It is a scandal, and I think you can blame [former Federal Reserve chairman Alan] Greenspan for not regulating the mortgage industry. But that's very different from speculating in government bonds or financial instruments, and that's a difficult point to get across, but I feel very strongly.
"Markets play a very useful role and they are amoral, not immoral."
Comments
Interesting Reading but probably over dramatic. Soros is after all a speculator himself and wants to see the markets move. He probably is already hedged in the direction he wants to lead us.
Personally, the UK housing markets needs to come down drastically, maybe, as bad as the US but probably not as fast so Soros may be right about timing.
Oil and commodities (including food) will fall as nothing goes up forever (basic logic "what goes up, must come down").
If Food prices keep rising, people will start dieing and "Speculation" should have no part in Global Famines surely.
I would not be surpised to see Oil at,or below, $60 this year or early next so hedge Funds should be careful.
The financial system DOES need regulation and Goverments have a responsibility in this. Free markets are good in theory but in practice they leave a lot to be desired.
All this from an ex Natwest Banker, now an entrepreneur in North America who is looking to a brighter future when these clouds pass as they surely will!
Posted by John on May 26, 2008 6:42 AM
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I wonder if Soros is gambling on revaluation of the Gulf currencies? It will be interesting to see what brings them down, revaluation or an oil price crash. But Soros is usually a bit early with his forecasts, and maybe on oil too.
George is of course correct, but it is too easy to blame the B of E. Their brief is to keep inflation in check using an indicator that strips out rises in house prices. The cost of housing makes up about 30% - 40% of most people's budget. If the cost of housing rises it is of course inflationary but the CPI didn't show it.
Had the BoE raised interest rates 5 years ago to burst the bubble we would not be in this predicament now. Gordon Brown claimed all the credit for giving them independence but the mistake was to give them the wrong target.
Don't blame the B of E, they just did their job.
KC Yoon
Mobile : +852-6074-0811/+86-13068404682
Monday, May 26, 2008
Friday, May 9, 2008
Mercator to raise debt, expand fleet
SINGAPORE - Singapore-listed dry bulk shipper Mercator Lines (Singapore) Ltd wants to raise more debt to fund an aggressive fleet expansion plan, but at the same time maintain a high cash flow to pay its shareholders well.
The Indian-owned firm, which has bought two ships since its December 2007 listing in Singapore, plans to spend about US$240 million to buy four more ships in the financial year ending March 2009 and might spend a similar amount the year after.
To fund the expansion, the company, which has shareholder's equity of about US$259 million, would take its debt-to-equity ratio of 1.2 times to around 2 times, chief executive officer Shalabh Mittal told Reuters in an interview on Friday.
'We will be comfortable at 2 times (debt-to-equity ratio),' Mr Mittal said adding that the company so far had seen no problems in funding its requirements despite the stress in global credit markets due to the US sub-prime mortgage crisis.
Mr Mittal said the company, which has a market value of about US$374 million, now owns seven vessels and plans to keep about 70 per cent of its fleet on longer-term, fixed-rate contracts and the rest on the spot market.
'Because 70 per cent of our fleet is on fixed contracts we have a far greater cash flow visibility and banks are happy to lend,' he said.
Despite the aggressive expansion plan, Mr Mittal said he would still want to maintain a payout ratio of 18 per cent, announced to be paid as cash dividend earlier this week when the company reported a four-fold rise in annual net profit.
'We are a company focused on good returns to our shareholders,' said Mr Mittal, son of Harish Mittal who is the chairman of the company and its Indian parent Mercator Lines Ltd, which owns 70 per cent of the Singapore firm.
Mercator reported a 303 per cent surge in net profit to US$52.2 million for the financial year ended March 31, 2008 on Wednesday, sparking a rally in its shares. The stock ended 13.4 per cent higher on Friday at 46.5 Singapore cents.
But the counter is still down about 40 per cent from its IPO price of 76 Singapore cents (US$0.556) amid worries about a global economic slowdown.
Mr Mittal said if the world avoids a full blown recession he expects dry bulk rates to rise from current levels, helped by surging demand, mainly for coal in India and iron ore in China.
The company mostly ships coal, iron ore and grain between India, China and Indonesia, and serves customers like Cargill, Glencore, China's Cosco Group, ArcelorMittal, and India's Reliance Energy and Tata Power.
'Mercator Lines Singapore's profit growth looks higher than the three bulk shipping companies we cover,' Deutsche Bank's Hong Kong-based analyst Joe Liew said who also covers China's Pacific Basin Shipping, Korea's STX Pan Ocean and Thailand's Theorising Thai.
'We expect the company's net profit to double in fiscal 2009 and grow 80 per cent in 2010 due to freight rate increases and capacity addition. The stock provides exposure to India's increasing coal imports for the power sector,' said Mr Liew, who has a buy rating on Mercator and a target price of 65 Singapore cents. -- REUTERS
The Indian-owned firm, which has bought two ships since its December 2007 listing in Singapore, plans to spend about US$240 million to buy four more ships in the financial year ending March 2009 and might spend a similar amount the year after.
To fund the expansion, the company, which has shareholder's equity of about US$259 million, would take its debt-to-equity ratio of 1.2 times to around 2 times, chief executive officer Shalabh Mittal told Reuters in an interview on Friday.
'We will be comfortable at 2 times (debt-to-equity ratio),' Mr Mittal said adding that the company so far had seen no problems in funding its requirements despite the stress in global credit markets due to the US sub-prime mortgage crisis.
Mr Mittal said the company, which has a market value of about US$374 million, now owns seven vessels and plans to keep about 70 per cent of its fleet on longer-term, fixed-rate contracts and the rest on the spot market.
'Because 70 per cent of our fleet is on fixed contracts we have a far greater cash flow visibility and banks are happy to lend,' he said.
Despite the aggressive expansion plan, Mr Mittal said he would still want to maintain a payout ratio of 18 per cent, announced to be paid as cash dividend earlier this week when the company reported a four-fold rise in annual net profit.
'We are a company focused on good returns to our shareholders,' said Mr Mittal, son of Harish Mittal who is the chairman of the company and its Indian parent Mercator Lines Ltd, which owns 70 per cent of the Singapore firm.
Mercator reported a 303 per cent surge in net profit to US$52.2 million for the financial year ended March 31, 2008 on Wednesday, sparking a rally in its shares. The stock ended 13.4 per cent higher on Friday at 46.5 Singapore cents.
But the counter is still down about 40 per cent from its IPO price of 76 Singapore cents (US$0.556) amid worries about a global economic slowdown.
Mr Mittal said if the world avoids a full blown recession he expects dry bulk rates to rise from current levels, helped by surging demand, mainly for coal in India and iron ore in China.
The company mostly ships coal, iron ore and grain between India, China and Indonesia, and serves customers like Cargill, Glencore, China's Cosco Group, ArcelorMittal, and India's Reliance Energy and Tata Power.
'Mercator Lines Singapore's profit growth looks higher than the three bulk shipping companies we cover,' Deutsche Bank's Hong Kong-based analyst Joe Liew said who also covers China's Pacific Basin Shipping, Korea's STX Pan Ocean and Thailand's Theorising Thai.
'We expect the company's net profit to double in fiscal 2009 and grow 80 per cent in 2010 due to freight rate increases and capacity addition. The stock provides exposure to India's increasing coal imports for the power sector,' said Mr Liew, who has a buy rating on Mercator and a target price of 65 Singapore cents. -- REUTERS
Noble Group - Nomura
1Q08: better than expectations
Noble’s 1Q08 numbers were well above our expectations, with the
improved operating performance evident in a sequential gain in
momentum into the usually quieter first quarter. Revenue rose
132% y-y to US$9.5bn, with gross profit up 167% y-y, to
US$355mn. Net profit grew 281.3% y-y to US$167.1mn. Excluding
an exceptional gain of US$47.9mn, net profit rose by 192% y-y to
US$119mn (about 40% of our full-year forecast). We are revising
our earnings with an upward bias.
Underpinning the results was: 1) strong volume in tonnage carried;
2) continued improvement in gross margins on the roll-out of the
group’s pipeline strategy, and; 3) effective working capital
management.
Tonnage of commodities carried by the group increase 77.1% y-y
to 27.1mn MT. Tonnage carried for third parties (categorised under
logistics) rose 24.0% to 11.9mn MT.
Gross margins rose to 3.74% in 1Q08 from 3.25% in 1Q07 with
gross margins in the metals & minerals division at 5.1% (vs 2.1%
in 1Q07) and agricultural division margins at 4.5% (vs 1.2%).
Noble demonstrated effective working capital management,
evident in improvement in the cash conversion cycle to 14 days (vs
19 days in 4Q07 and 21 days in 1Q07) and lower inventory days
on hand at 18 days (vs 24 days in 4Q07 and 22 days in 1Q07).
While we have flagged in past notes that management’s ROE
target of 20% “will be challenging as it builds out the supply
pipeline”, the group delivered (on our numbers) annualised ROE of
28.5% (vs 15.8% in 1Q07).
Gearing (adjusted for inventory) remains low at 0.32x (vs 0.54x in
1Q07), with interest cover improving to 3.3x (vs 1.8x in 1Q07).
Noble’s 1Q08 numbers were well above our expectations, with the
improved operating performance evident in a sequential gain in
momentum into the usually quieter first quarter. Revenue rose
132% y-y to US$9.5bn, with gross profit up 167% y-y, to
US$355mn. Net profit grew 281.3% y-y to US$167.1mn. Excluding
an exceptional gain of US$47.9mn, net profit rose by 192% y-y to
US$119mn (about 40% of our full-year forecast). We are revising
our earnings with an upward bias.
Underpinning the results was: 1) strong volume in tonnage carried;
2) continued improvement in gross margins on the roll-out of the
group’s pipeline strategy, and; 3) effective working capital
management.
Tonnage of commodities carried by the group increase 77.1% y-y
to 27.1mn MT. Tonnage carried for third parties (categorised under
logistics) rose 24.0% to 11.9mn MT.
Gross margins rose to 3.74% in 1Q08 from 3.25% in 1Q07 with
gross margins in the metals & minerals division at 5.1% (vs 2.1%
in 1Q07) and agricultural division margins at 4.5% (vs 1.2%).
Noble demonstrated effective working capital management,
evident in improvement in the cash conversion cycle to 14 days (vs
19 days in 4Q07 and 21 days in 1Q07) and lower inventory days
on hand at 18 days (vs 24 days in 4Q07 and 22 days in 1Q07).
While we have flagged in past notes that management’s ROE
target of 20% “will be challenging as it builds out the supply
pipeline”, the group delivered (on our numbers) annualised ROE of
28.5% (vs 15.8% in 1Q07).
Gearing (adjusted for inventory) remains low at 0.32x (vs 0.54x in
1Q07), with interest cover improving to 3.3x (vs 1.8x in 1Q07).
Starhub - Phillip Capital
StarHub Limited
Strong results; within expectations
1Q FY08 results. StarHub reported 1Q operating revenue of S$534.9m (+13.2% yoy) and net profit of S$80.1m (+14.5% yoy). Moreover, EBITDA increased to S$167.7m (+6.3% yoy). It also declared an interim dividend of S$0.045 per ordinary share, which was higher than the dividend of S$0.035 last year.
Strong results; within expectations
1Q FY08 results. StarHub reported 1Q operating revenue of S$534.9m (+13.2% yoy) and net profit of S$80.1m (+14.5% yoy). Moreover, EBITDA increased to S$167.7m (+6.3% yoy). It also declared an interim dividend of S$0.045 per ordinary share, which was higher than the dividend of S$0.035 last year.
JES - CIMB
China-based shipbuilder JES International Holdings, which was listed last December,
yesterday posted a 25.6% rise in first-quarter net profit to 30.1 million yuan (S$5.9
million) from 24 million yuan a year ago as its margin enhancement strategy kicked in.
The profit rise outpaced revenue growth, which increased 17.5% to 203.7 million yuan
from 173.4 million yuan in the previous corresponding period. This was due to the group
increasing production of larger vessels with higher contract prices, JES said. Gross
margin for the period under review also increased to 22.8% compared with 17.4%
previously due to the larger bulk carriers built by JES. Bulk carriers contributed 73.1% of
revenue compared with 57.4% previously. Contribution from containerships fell as the
group kept its focus on building bigger bulk carriers. The group also recorded a net
foreign exchange loss of 10.5 million yuan due to the erosion of contracted revenue in
US dollars because of the appreciation of the yuan. Diluted EPS was 0.0259 yuan, down
from 0.2844 yuan as the share base rose sharply from 84.3 million shares to about 1.16
billion shares. (BT)
yesterday posted a 25.6% rise in first-quarter net profit to 30.1 million yuan (S$5.9
million) from 24 million yuan a year ago as its margin enhancement strategy kicked in.
The profit rise outpaced revenue growth, which increased 17.5% to 203.7 million yuan
from 173.4 million yuan in the previous corresponding period. This was due to the group
increasing production of larger vessels with higher contract prices, JES said. Gross
margin for the period under review also increased to 22.8% compared with 17.4%
previously due to the larger bulk carriers built by JES. Bulk carriers contributed 73.1% of
revenue compared with 57.4% previously. Contribution from containerships fell as the
group kept its focus on building bigger bulk carriers. The group also recorded a net
foreign exchange loss of 10.5 million yuan due to the erosion of contracted revenue in
US dollars because of the appreciation of the yuan. Diluted EPS was 0.0259 yuan, down
from 0.2844 yuan as the share base rose sharply from 84.3 million shares to about 1.16
billion shares. (BT)
K-Reit - UBS
K-REIT Asia
F ree float market cap improves after rights
71% of minorities subscribed to right units, beating our expectations
KREIT has announced that 92.2% of the 396.9m rights have been taken up by its
unit-holders, 4.1% by minority unit-holders subscribing to excess rights, and the
remaining 3.7% will be taken up by Keppel Land and Keppel Corp. As a result,
Kepland and Kep Corp will own 43.6% and 31.5% of the REIT, respectively.
Free float market cap rose to US$170m, but still small and illiquid
While KREIT’s free float has improved, it still the lowest free float market cap
among SREITs with Singapore commercial assets. For office exposure, we prefer
Suntec and CapitaCommercial Trust (CCT), which are more liquid and have higher
organic DPU CAGRs of 6.6% and 10% respectively, compared to KREIT’s 4.9%.
SREIT top picks are defensives: Suntec, FCT and Parkway Life REIT
We continue to expect investors to favour large-cap liquid SREITs and believe
interest in KREIT will be limited. There is potential uncertainty about the
refinancing of its remaining bridging loan of S$390m, which expires in September
2008, and how Keppel Corp and/or Keppel Land will seek to increase liquidity and
free float.
Valuation: upgrade from Sell to Neutral, raise PT from S$1.20 to S$1.45
We adjust our DPU estimates to account for lower office rent assumptions for One
Raffles Quay. We base our price target on a DCF analysis, using a beta of 1.2,
market risk premium of 5%, and terminal growth rate of 2.3%.
F ree float market cap improves after rights
71% of minorities subscribed to right units, beating our expectations
KREIT has announced that 92.2% of the 396.9m rights have been taken up by its
unit-holders, 4.1% by minority unit-holders subscribing to excess rights, and the
remaining 3.7% will be taken up by Keppel Land and Keppel Corp. As a result,
Kepland and Kep Corp will own 43.6% and 31.5% of the REIT, respectively.
Free float market cap rose to US$170m, but still small and illiquid
While KREIT’s free float has improved, it still the lowest free float market cap
among SREITs with Singapore commercial assets. For office exposure, we prefer
Suntec and CapitaCommercial Trust (CCT), which are more liquid and have higher
organic DPU CAGRs of 6.6% and 10% respectively, compared to KREIT’s 4.9%.
SREIT top picks are defensives: Suntec, FCT and Parkway Life REIT
We continue to expect investors to favour large-cap liquid SREITs and believe
interest in KREIT will be limited. There is potential uncertainty about the
refinancing of its remaining bridging loan of S$390m, which expires in September
2008, and how Keppel Corp and/or Keppel Land will seek to increase liquidity and
free float.
Valuation: upgrade from Sell to Neutral, raise PT from S$1.20 to S$1.45
We adjust our DPU estimates to account for lower office rent assumptions for One
Raffles Quay. We base our price target on a DCF analysis, using a beta of 1.2,
market risk premium of 5%, and terminal growth rate of 2.3%.
Singapore Banks - UBS
Lack near-term catalyst
Downgrade OCBC and UOB to Neutral
Singapore bank share prices have rebounded by an average of 26% from the lows
of Q108 and are now trading near their 10-year average PE and P/book valuations.
This rebound, together with little room for earnings forecast upgrades post the
result season and the lack of near term catalysts, leads us to believe that it will be
difficult to command a valuation premium, and thus we are downgrading our
ratings for OCBC and United Overseas Bank (UOB) from Buy to Neutral. We
maintain our Buy rating for DBS Bank.
Moderation in second half
Core earnings in Q108 met market expectations, but it was also clear that the very
strong loan growth recorded in the past few quarters is likely to moderate, an
outcome of slower global economic growth and the banks themselves exercising
caution in this environment.
Interest rate will be the key
We think the key to further upside potential to earnings rests with the direction of
interest rates, which have fallen 100bp YTD. We are assuming no recovery in 2008
but, should they rebound, it would mean better margins and earnings.
Buy DBS
We believe the market has been cautious towards DBS as it is the prime casualty of
falling rates and also because of concerns over the performance of its large
Treasury division in these tough markets. We believe the lower rates are fully
priced in and that there is scope for improvement with loan spreads widening while
the improvement in the capital markets in recent weeks suggests the worst is over
for Treasury earnings.
Downgrade OCBC and UOB to Neutral
Singapore bank share prices have rebounded by an average of 26% from the lows
of Q108 and are now trading near their 10-year average PE and P/book valuations.
This rebound, together with little room for earnings forecast upgrades post the
result season and the lack of near term catalysts, leads us to believe that it will be
difficult to command a valuation premium, and thus we are downgrading our
ratings for OCBC and United Overseas Bank (UOB) from Buy to Neutral. We
maintain our Buy rating for DBS Bank.
Moderation in second half
Core earnings in Q108 met market expectations, but it was also clear that the very
strong loan growth recorded in the past few quarters is likely to moderate, an
outcome of slower global economic growth and the banks themselves exercising
caution in this environment.
Interest rate will be the key
We think the key to further upside potential to earnings rests with the direction of
interest rates, which have fallen 100bp YTD. We are assuming no recovery in 2008
but, should they rebound, it would mean better margins and earnings.
Buy DBS
We believe the market has been cautious towards DBS as it is the prime casualty of
falling rates and also because of concerns over the performance of its large
Treasury division in these tough markets. We believe the lower rates are fully
priced in and that there is scope for improvement with loan spreads widening while
the improvement in the capital markets in recent weeks suggests the worst is over
for Treasury earnings.
Keppel Corp - DMG & partners
Keppel Corp : S$10.64 BUY (TP: S$12.76)
A true conglomerate
We re-initiate coverage on Keppel Corp with a BUY rating. We like Keppel
for its diversified portfolio that spans across Offshore & Marine,
Property, Infrastructure and Investments business segments. The diverse
business mix should protect its earnings from a drastic slowdown in any one
market and reduce overall earnings volatility. While we still believe that
Keppel would continue to enjoy strong earnings from Offshore & Marine in
this favourable oil and gas sector climate, the Infrastructure arm is
slated to be the next defensive recurring income stream in the years to
come. We value Keppel based on sum-of-the-parts valuation metric, deriving
a target price of S$12.76. This implies a forward FY08F PE of 19.5x, in
line with the regional conglomerate peers.
A true conglomerate
We re-initiate coverage on Keppel Corp with a BUY rating. We like Keppel
for its diversified portfolio that spans across Offshore & Marine,
Property, Infrastructure and Investments business segments. The diverse
business mix should protect its earnings from a drastic slowdown in any one
market and reduce overall earnings volatility. While we still believe that
Keppel would continue to enjoy strong earnings from Offshore & Marine in
this favourable oil and gas sector climate, the Infrastructure arm is
slated to be the next defensive recurring income stream in the years to
come. We value Keppel based on sum-of-the-parts valuation metric, deriving
a target price of S$12.76. This implies a forward FY08F PE of 19.5x, in
line with the regional conglomerate peers.
Thursday, May 8, 2008
China Milk - CIMB
Description: China Milk Products Group supplies raw milk, pedigree bull semen, and
pedigree dairy cow embryos for embryo transfer.
Immediate outlook: The stock is now facing some major resistances. Technical indicators
have flattened out earlier but they are starting to inch up again. If the stock is able to
overcome the trend line resistance (at S$0.83) and its 100-day SMA (at S$0.85) then it
could rally further from here. Technical Buy now ahead of the breakout. Buy at S$0.79-
0.82. Put a tight stop below the S$0.765 level, just in case the trade turns sour. Upside
target is S$0.97-1.00.
Medium term outlook (2-6 months): The stock is now testing its long term trend line
support turned resistance and its trend line resistance at S$0.83. Again, the stock has to
overcome both of these resistances before an uptrend can ensue. Looking at its indicators,
the momentum still appears strong. Hence it is still a good possibility that the stock can
overcome the tough resistance in the coming week. LT investors could either choose to
buy half now and buy the rest on breakout or wait for the breakout before jumping in. If the
stock is able to breach the resistances, it could be heading towards S$1.16-1.20 in the
medium term. However, trade cautiously and keep a tight stop.
pedigree dairy cow embryos for embryo transfer.
Immediate outlook: The stock is now facing some major resistances. Technical indicators
have flattened out earlier but they are starting to inch up again. If the stock is able to
overcome the trend line resistance (at S$0.83) and its 100-day SMA (at S$0.85) then it
could rally further from here. Technical Buy now ahead of the breakout. Buy at S$0.79-
0.82. Put a tight stop below the S$0.765 level, just in case the trade turns sour. Upside
target is S$0.97-1.00.
Medium term outlook (2-6 months): The stock is now testing its long term trend line
support turned resistance and its trend line resistance at S$0.83. Again, the stock has to
overcome both of these resistances before an uptrend can ensue. Looking at its indicators,
the momentum still appears strong. Hence it is still a good possibility that the stock can
overcome the tough resistance in the coming week. LT investors could either choose to
buy half now and buy the rest on breakout or wait for the breakout before jumping in. If the
stock is able to breach the resistances, it could be heading towards S$1.16-1.20 in the
medium term. However, trade cautiously and keep a tight stop.
Tuesday, May 6, 2008
Keppel Corp
SINGAPORE, May 6 - Singapore's Keppel Corp , the world's top offshore oil rig-maker, said on Tuesday its unit Keppel FELS has won a contract to build a $512 million drilling rig.
The contract with a subsidiary of ENSCO International is due for delivery in the second half of 2011, Keppel said in a statement.
The contract with a subsidiary of ENSCO International is due for delivery in the second half of 2011, Keppel said in a statement.
Thursday, May 1, 2008
Fed cuts key interest rate by 1/4 point
WASHINGTON, April 30 (Reuters) - The Federal Reserve lowered a key U.S. interest rate by a modest quarter percentage point on Wednesday in what may be the last of a series of cuts aimed at aiding an economy hit hard by a housing slump and credit market turmoil.
The Fed's action takes the bellwether federal funds rate to 2 percent, the lowest since December 2004. It was the seventh reduction in a campaign that has brought rates down by 3.25 percentage points since mid-September.
President George W. Bush on Tuesday said the U.S. economy faced a "tough time," a point underscored on Wednesday by a report that showed U.S. gross domestic product expanded at a slim 0.6 percent annual rate in the first quarter.
While the growth rate was a bit stronger than economists had expected, it reflected a buildup in inventories that may weigh on the economy in coming months.
Other details in the report were decidedly weak.
Consumer spending, which accounts for two-thirds of U.S. output, grew at the slowest pace since 2001, business investment fell and homebuilding continued to nosedive, recording the biggest drop in 26 years.
Fed Chairman Ben Bernanke told Congress on April 2 that "recession is possible," adding that the Fed believed there might be a "slight contraction" in the economy in the first six months of the year.
At the same time, with gasoline prices heading toward $4 dollars a gallon and strong global demand pushing up food prices, some Fed officials have worried that a desire to bolster the economy could divert the central bank's attention from inflation pressures.
In addition to rate cuts, the Fed has taken a number of emergency steps to ease credit strains that have threatened to make the economy's ills worse, pumping billions of dollars into markets to keep them from choking on mortgage-related bets.
At their meeting on Wednesday, Fed officials discussed a new measure -- paying interest on commercial bank reserves held at the central bank -- that could improve their ability to provide liquid funds to the market.
The Fed has also mulled whether expanding the size of its term auction facility cash auctions for banks and extending the duration of those loans beyond 28 days could help ease still-tight credit conditions.
The Fed's action takes the bellwether federal funds rate to 2 percent, the lowest since December 2004. It was the seventh reduction in a campaign that has brought rates down by 3.25 percentage points since mid-September.
President George W. Bush on Tuesday said the U.S. economy faced a "tough time," a point underscored on Wednesday by a report that showed U.S. gross domestic product expanded at a slim 0.6 percent annual rate in the first quarter.
While the growth rate was a bit stronger than economists had expected, it reflected a buildup in inventories that may weigh on the economy in coming months.
Other details in the report were decidedly weak.
Consumer spending, which accounts for two-thirds of U.S. output, grew at the slowest pace since 2001, business investment fell and homebuilding continued to nosedive, recording the biggest drop in 26 years.
Fed Chairman Ben Bernanke told Congress on April 2 that "recession is possible," adding that the Fed believed there might be a "slight contraction" in the economy in the first six months of the year.
At the same time, with gasoline prices heading toward $4 dollars a gallon and strong global demand pushing up food prices, some Fed officials have worried that a desire to bolster the economy could divert the central bank's attention from inflation pressures.
In addition to rate cuts, the Fed has taken a number of emergency steps to ease credit strains that have threatened to make the economy's ills worse, pumping billions of dollars into markets to keep them from choking on mortgage-related bets.
At their meeting on Wednesday, Fed officials discussed a new measure -- paying interest on commercial bank reserves held at the central bank -- that could improve their ability to provide liquid funds to the market.
The Fed has also mulled whether expanding the size of its term auction facility cash auctions for banks and extending the duration of those loans beyond 28 days could help ease still-tight credit conditions.
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