The European Central Bank cut interest rates by a quarter of a point on Thursday
to counter the twin threats of recession and deflation in the euro zone, and
announced further unorthodox measures in an effort to aid the functioning of
financial markets.
The central bank decided to
conduct two long-term refinancing operations at a fixed rate with a maturity of
36 months and to accept single-A rated asset-backed securities as collateral
among its non-standard measures to reduce market tension.
The euro zone has won the battle with Greece, but economic war still looms.
The euro zone may have stood up against Greece, but its fragility is now fully illuminated. The picture is grim and becomes even grimmer looking ahead. Consider the reasons that pushed George Papandreou's decision to call the Greeks to the polls and then consider whether the very same behaviour may happen again in the future, but with much bigger players and much bigger stakes.
Critics say Papandreou's decision to call the Greeks to a referendum to be held at the beginning of December was foolish. I beg to differ. The Greek Prime Minister used some of his political acumen to gain room for negotiation - for himself and for his country. In the past few months, the country has been at the centre of many talks in the finance community. The looming question: will small Greece bring down mighty Germany and the euro?
Europe was in check, or so he must have thought. As the old motto goes: ''If you owe one million to a bank, the bank owns you. But if you owe one billion to a bank, then you own that bank!'' Greece owes some €340 billion ($452 billion) to many banks in Europe and to the European Central Bank. Papandreou must have believed that he owned a couple of banks.
If Greece accepted the deal without further negotiations, Greeks would be left with the only option of going back to work (hard), and enduring difficult times for many years to come. Greece knew that once it signed the deal, there would no longer be space for negotiations. Game over.
Papandreou also knew that, to some extent, the pressure was more on Europe than on Greece. That is, Europe had more to lose from a paralysis than Greece.
In periods of great uncertainty, investment dries up. When the fate of millions is left in the hands of a few statesmen with a less than transparent agenda, the real economy waits for the new rules to be defined and clearly communicated and entrepreneurs and investors may move on to new investment opportunities.
Papandreou must have thought that the more Greece could make the process drag on, the more it would bring Europe to the brink of default, and the more Greece would remain a high priority on the agenda. All of which meant more room for negotiating a neat package for the Greek people.
However, the risks were high, and I am sure Papandreou knew it. As is often the case in finance, the higher the returns one wants to achieve, the higher the risks one needs to take. The art of decision-making lies in balancing the trade-off between risk and return. The Greek Prime Minister played a balancing game, miscalculated and ended up failing.
Papandreou likely overestimated the economic damage that a Greek default and exit could cause to other members of the euro zone. Or he underestimated the damage that the paralysis could have caused for other members of the euro zone, namely Italy. The investment slowdown and volatility that might have followed could have impaired the ability of Italy to survive in the euro zone. And the euro zone could not afford that. At least, not now.
The crystal-clear clarity of the German Chancellor, Angela Merkel, and French President, Nicolas Sarkozy, was enough to help lessen the impact and bring Greece to reason. But will it be enough if something similar is done by other more important players in the future? A Greek exit from the euro zone can inflict a lot of pain both in and out of Europe, but the world can handle it. However, what if Italy (or Spain) resorts to this kind of behaviour? The stakes would be much higher and it is not clear what Merkel and Sarkozy would or could reply.
A battle has been won and the horizon is clear for now. But this is no time for celebrations. A much bigger war may be coming, and it is not clear that Europe has the right weapons to fight it.
Salvatore Cantale is Professor of Finance at IMD in Switzerland
TOKYO - Asian shares and commodities fell on Tuesday, after a shock announcement
that Greece will hold a referendum on a new EU bailout deal for the debt-ridden
country threw efforts to resolve the euro zone's debt crisis into fresh doubt
BRUSSELS - European leaders clinched on Thursday a grand deal to pull the
eurozone from the brink, convincing banks to take big losses on Greek debt while
massively boosting a rescue fund to one trillion euros.
Banks accepted a 50-per cent writedown on their Greek bonds to reduce the
country's debt mountain by 100 billion euros after hours of tough negotiations
at a summit that ran from Wednesday evening to early Thursday morning.
French President Nicolas Sarkozy said after almost 10 hours of talks that the
decisions were 'a major step forward to put in place powerful firewalls to
prevent the crisis from spilling over to other countries of the eurozone.'
Leaders came to their second summit in days amid global and market demands
for a 'comprehensive package' and fears the crisis could trigger world
recession.
Also agreed in a four-point package of measures was an agreement for banks to
beef up their capital buffers to absorb losses on Greek bonds, as well as
pledges to tighten economic governance and fiscal discipline.
'The situation was evolving into a systemic concern threatening the eurozone
as a whole. This threat has to be contained,' said EU president Herman Van
Rompuy.
Negotiations with the banks appeared close to collapse at one point after
Sarkozy and German Chancellor Angela Merkel broke off from the summit to hold
direct talks with the head of the banking lobby, Charles Dallara of the
Institute of International Finance.
The banks in past weeks had agreed to take a 21-per cent 'haircut' on Greek
bond-holdings as part of a second bailout for Athens agreed at a July summit,
but the economic situation since has deteriorated due to recession.
The lenders had raised their offer to 40 per cent but governments insisted on
a 50-per cent 'haircut' to slice a big chunk off Greece's 350-billion-euro
debt.
Amid fears of a possible bank meltdown, European leaders also agreed to
recapitalise banks.
'We made good progress on the bank recapitalisation, that wasn't watered
down, it now has been agreed,' said British Prime Minister David Cameron at the
close of a quick summit of the European Union's 27 leaders that preceded long
talks into the wee hours of the 17-nation eurozone.
The European Banking Authority said banks would need 106 billion euros to
fulfill the requirements by June 2012.
After bailouts of Greece, Ireland and Portugal, eurozone leaders agreed to
boost between four- and fivefold the firepower of their 440-billion-euro rescue
fund to protect bigger economies in danger, such as Italy and Spain.
The fund, the main weapon against the crisis, has already been used to rescue
Portugal and Ireland, and would be tapped in a new Greek bailout. But it would
be too small for Italy and Spain, the eurozone's third and fourth biggest
economies.
Under the plan, the eurozone would use clever financial footwork to
'leverage' up the European Financial Stability Facility (EFSF) to one trillion
euros without increasing guarantees provided by governments.
With fears of contagion hitting Italy, Prime Minister Silvio Berlusconi came
to the summit with a detailed list of pledges to cut his country's
1.9-trillion-euro debt.
Mr Van Rompuy said leaders welcomed the vows but called on Rome to 'abide' by
its commitments.
With the world on tenterhooks, emerging powers China and Russia waded in with
offers to help Europe safeguard the global economy by offering to contribute to
the rescue fund.
The development came as global powers, from the United States to Japan and
China, pressed European leaders to come up with a lasting solution to the debt
crisis before a G20 summit in France on Nov 3 and 4. -- AFP
Source: Business Times Breaking News
2)
Saturday: Chancellor Merkel and President Sarkozy meet
3) Sunday:
EU leaders meet. It appears no agreement will be formally announced, but leaders
will huddle to discuss the "agreement in depth." Get that?
4)
Wednesday: Call it Summit 2, a "definitive agreement" on bank
recapitalization, the EFSF will be announced. That, according to a joint
statement by Sarkozy and Merkel that was issued this afternoon.
DJ MARKET TALK:Keppel +1.6%; CS Tips Possible US$4.4B Petrobras Orders
0713 GMT [Dow Jones] Keppel Corp. (BN4.SG) remains a top performer Friday,
+1.6% at S$8.92, as analysts laud the rigbuilder's 3Q results. Credit Suisse
notes the consensus-smashing net profit figure of S$406 million was driven by
the OM division, where operating margins increased to 26.0% vs 24.2% in 2Q11. It
says "management attributed the strong margins to improved execution as well as
higher-priced contracts signed in 2007-08." On Keppel's view that it will be
able to secure "a fair share" of Petrobras orders in its ongoing 21-rig tender,
the house says "Keppel remains well positioned to win up to US$4.4 billion of
orders through its bid for six rigs." It adds management's view that tighter
credit conditions had yet to impact customers "is in line with our view that
there is limited risk of order cancellations, given more favourable terms for
new contracts." CS keeps its Outperform call with a raised S$12.40 target, from
S$11.60 "trading at 2011E P/E of 10.6X and P/B of 2.0X, Keppel is our top pick
within the Singapore O&M sector." (matthew.allen@dowjones.com)
NEW YORK (Dow Jones)--U.S. stocks pared their early loss in whippy trading
Thursday that was driven by European sovereign-debt worries, driving higher
after the leaders of France and Germany said that a key bailout plan would be
approved by next Wednesday at the latest.
The Dow Jones Industrial Average was up 19 points, or 0.2%, to 11524 at 1:20
p.m. EDT, while the Standard & Poor's 500-stock index added 4 points, or
0.4%, to 1214. The Nasdaq Composite fell 4 points, or 0.2%, to 2600.
After declining midsession following reports that Sunday's planned meeting of
euro-zone officials could be postponed because of disagreements on how to deploy
cash in the continent's bailout fund, stocks flitted into positive territory
after French President Nicolas Sarkozy and German Chancellor Angela Merkel
issued a joint statement calling for immediate talks with the private sector
over Greek debt. They said that the continent's leaders would have a plan in
place by Wednesday at latest
.. in the meantime , shorts are getting squeezed hard ... only just one week ago, many hedge funds were caught in a shorting feeding frenzy, betting on and trying to induce a lehman x 10-type meltdown & contagion for europe .. they could be beating a hasty retreat by now ..
(Reuters) - Asian shares and the euro edged up on Monday after the leaders of France and Germany pledged to
unveil a comprehensive plan to solve the euro zone's two-year-old sovereign debt
crisis by the end of the month.
European policymakers have been under pressure from volatile financial
markets, amid fears that the crisis is heading inexorably toward a default by Greece -- and perhaps others --
that could unleash turmoil in the banking system.
German Chancellor Angela Merkel and French President Nicolas Sarkozy said
after talks in Berlin on Sunday that their goal was to come up with a
sustainable answer for Greece's woes, agree how to recapitalise European banks
and present a plan for accelerating economic coordination in the euro zone by a G20 summit
in Cannes on November 3-4. http://www.reuters.com/article/2011/10/10/us-markets-global-idUSTRE77L0AE20111010
(Reuters) - World stocks rose for a second day Thursday while government bonds fell as expectations grew policymakers would take steps to support European banks, under threat from the impact of a possible Greek default.
German Chancellor Angela Merkel said Wednesday Berlin was ready to recapitalize
its banks if needed, adding to pledges by European finance ministers to safeguard banks
in the face of mounting concerns about a Greek default.
By: Peter Spiegel and Alex Barker in
Luxembourg, Financial Times
European Union finance ministers
are examining ways of co-ordinating recapitalizations of financial institutions
after they agreed that additional measures were urgently needed to
shore up the region’s banks.
Although the details of the plan
are still under discussion, officials said EU ministers meeting in Luxembourg
had concluded that they had not done enough to convince financial markets that
Europe’s banks could withstand the current debt crisis.
Published: Thursday, 29 Sep 2011 | 6:52 AM ET By: Peter Guest Staff Writer, CNBC.com
Germany's parliament has approved
reforms to the European Financial Stability Facility (EFSF) that would allow the
fund to participate in the primary market and to recapitalize European banks in
a much-anticipated vote in the Bundestag.
0551 GMT [Dow Jones] Despite today's HSI rebound which snaps a 4-session 8.5%
losing streak, the index remains below its 5-day moving average at 18,164, which
marks the 17th consecutive session that the benchmark index is trading below its
5-day MA, observes a local trader. He says this is the probably the first time
since the Asian financial turmoil back in 1997/98 that the HSI had stayed below
the 5-day MA for such a long time, which shows "how oversold Hong Kong stocks
are." He believes this round of rebound may take the index to the 19,000 level,
and the duration could last for 2 weeks. The HSI is up 2.8% at 17,987.36 on a
broad-based rebound; blue chips rallying more than 5% include China Merchants
Holdings (0144.HK), Esprit (0330.HK), Cnooc (0883.HK), Ping An (2318.HK) and
Chalco (2600.HK), although the fly in the ointment is that volume remains
sluggish at HK$34.25 billion. (robert.li@dowjones.com)
We had a small breakout on Friday , for those who bought but did not close positions for the weekend , it might be a good idea to take half profit at STi @ 2805 Monday morning if at all possible then take the rest at 2815-20 .. or wait out the fomc decision on wed nite ... for me , i have closed all my positions on friday noon almost at day high , having gone long the previous days( wed , thurs - as mentioned in http://sgxswinger.blogspot.com/2011/09/reassuring-words-from-merkel-should.html .. ) as mentioned in previous posts all too often , i do not believe in holding stocks over a weekend unless in special circumstances .... i may go long again tomorrow Monday depending on what signals the market sends me .. but i would prefer not to hold any positions just before release of important economic data or fomc statements.
As mentioned in previous post on tues 13 sept market still in consolidation wedge with upward bias or small relief rally from Merkel's reassuring words , preparing for a breakout anytime now- maybe next week , maybe sooner ...look for strong stocks to buy ... goodluck .. ikyp .. .... see http://sgxswinger.blogspot.com/2011/09/reassuring-words-from-merkel-should.html
.. but buyers beware - always be mindful of europe fears returning to
haunt us over the weekend ..
Chinese Premier Wen Jiabao, facing calls to widen support for indebted European countries, signaled that developed nations should cut deficits and create jobs rather than relying on China to bail out the world economy.
“Countries must first put their own houses in order,” Wen said today at the World Economic Forum in the Chinese city of Dalian. “Developed countries must take responsible fiscal and monetary policies. What is most important now is to prevent the further spread of the sovereign debt crisis in Europe.” Stocks dropped in Asia morning as Wen's comments damped optimism that China can help stabilize the euro-region, after Italy this month followed Spain, Portugal and Greece in seeking Chinese investment. Wen said that the sovereign debt crisis in Europe is spreading, and a former adviser to China's central bank said the nation should avoid buying bonds from European countries where leaders and central bankers are in disarray.
day traders might want to short the euphoria over merkel's reassurance at open in the morning near the supply zone at sti around 2770 and go long when the market starts to turn up near 2700 ..
Sti is still in a consolidation wedge and may take a 1-2 more days to either breakout or breakdown .. ( more likely breakout ) .... IKYP ..
NEW YORK/BEIJING - Italy has asked China to make 'significant' purchases of
Italian debt, the Financial Times reported on its website on Monday.
Italian officials told the FT that Lou Jiwei, chairman of China Investment
Corp (CIC), headed up a delegation to Rome last week to meet with Giulio
Tremonti, finance minister, and Italy's Cassa Depositi e Prestiti.
Two weeks ago, Italian officials were in Beijing to meet CIC and China's
State Administration of Foreign Exchange (SAFE), which manages the bulk of
China's foreign exchange reserves, the FT said.
CIC is the country's US$300 billion sovereign wealth fund.
China signalled in April that it could buy more debt from the eurozone's
weaker states. There are no precise figures, but China has said it has bought
billions of euros of debt.
Wu Xiaoling, a former deputy governor of the People's Bank of China, told
Reuters on Tuesday, that investor 'panic' about Europe's debt crisis is
unnecessary, and China is ready to work with others to boost market confidence.
'We will continue to support Europe's measures in maintaining a stable euro,'
said Ms Wu, who is now with the National People's Congress Standing Committee,
the law-making body.
With about a quarter of China's record foreign currency reserves of US$3.2
trillion estimated to be held in euro assets, Chinese leaders have repeatedly
voiced support for the debt-mired single currency area.
Premier Wen Jiabao said earlier this month that China retains confidence in
the euro and Europe's economy but the region's governments need to ensure the
security of Chinese investments there. -- REUTERS
Bill E's take : despite market talk , i think China is not really interested in buying toxic PIIGS bonds which she knows are dead on arrival , china is hoping to exploit the euro crisis to buy prized assets in europe on the cheap for her strategic use either military or commercial - eg technology, resources companies , ports , real estate in strategic locations etc. and use the opportunity to open up eurozone markets and internationalize the RMB. so this bit of "news" could be wishful thinking or political gamesmanship on the part of the italians , and is unlikely to move markets for long ..
All our stocks hit our upward revised target bands today - which should trigger profit taking of some sort -- YZJ hit high of 1.11 ( tgt band 1.11-1.14) , Kepcorp hit high of 8.85 ( tgt band 8.85-9.05) and Genting hit 1.655 soon after open , then correct , and closed at day high of 1.69 exceeding our expectations by 1c ( tgt band 1.65 - 1.68) . Capitaland hit high of 2.72 ( tgt band 2.75-2.78) ouch ....miss target by 3c ..
if we had taken profits on at least half of our portfolio this thurs morning as planned when it hit our tgt price band ( see post mortem on wed close below http://sgxswinger.blogspot.com/2011/09/market-may-open-down-and-then-upswing_06.html) when most stocks were at day high with Sti at around 2840-55 a zone where i would expect some profit taking , we would not be so stressed out by the subsequent plunge in the afternoon and would now be sitting comfortably on the remaining half of our stock for another day's upmove which hopefully shouldcome tomorrow friday's morning if not afternoon if not next week ...
i suppose it would be prudent money management policy to again take profit on half of the remaining half tomorrow friday if STi hopefully hits 2880 or when the stock hits its target band ... and ride the remaining portfolio ( one quarter of the original purchase ) to next week without much stress over the weekend since we have already locked in handsome profits on 75% of our original purchase on tues/wed if the Obama and Bernanke speeches are well received by the markets and congress tonite thurs...
we here revise upward our tgt band for Genting to 1.70 - 1.74, it is the the strongest horse in our stable - i would recommend taking profits on half of remaining Genting stock tomorrow friday morning , hopefully with a good exit price within our new tgt band ( 1.70-1.74) soon after open .. always be mindful that europe fears can always return to haunt us over a weekend , what more with 9/11 10 -year anniversary on sunday ....can always come back next week if there are still legs to its current very strong move.
Post-mortem after market close on wed 7 sept : all our stocks moved up as expected, most within striking distance of our target bands , with Genting hitting high of 1.64 ( tgt 1.64-1.66) , YZJ hitting high of 1.085 ( tgt 1.09 -1.11 ) and Keppel hitting high of 8.72( tgt 9.80-8.90)
if Dow closes up tonite wed as i would expect , then all 3 stocks should easily hit the mid to high end of our tues target bands tomorrow thurs morning when STi is about 2840-50 at which time it might be prudent money mgt policy to take half the chips off the table and see how the markets react thereafter..
we here revise upwards our tgt bands - genting - 1.65-1.68 , yzj - 1.11 -1.14 kepcorp 8.85-9.05...
DJ MARKET TALK: Genting Off 2.4%; Rebound May Have Ended -CIMB 02/09/2011 12:23
0421 GMT [Dow Jones] Genting Singapore (G13.SG) is down 2.4% at S$1.61, after rising 7.5% over the last three sessions, although yesterday saw the stock end 0.9% lower at S$1.65 after retreating from an intraday high of S$1.75. CIMB says, based on charts, "a rebound (if any) would be a good opportunity to lock in recent gains." It says upside for Genting is likely to be capped by downtrend channel support-turned-resistance at S$1.78-S$1.80. "Prices hit a high of S$1.75 before turning lower yesterday. It is possible that this rebound (off a one-year low of S$1.455 hit Aug. 22) may have ended but we would allow some room for this rebound to continue for a while longer." It adds, "we cannot completely rule out that this rebound still has some legs. Nevertheless, the downside risk is now a lot higher compared to its potential reward." It adds, longer term, the downtrend could take prices back below the S$1.455 low into the S$1.25-S$1.35 range. (matthew.allen@dowjones.com)
The STi should enjoy a small relief rally having bottomed out at 2680 - first stop 2765 retrace then 2780 retrace then 2815-30 before it suffers a strong but brief downward reaction there .. then we shall see ...
Kepcorp bottoms out at 8.40 -- first stop 8.62 then retrace then 8.72 retrace then 8.82 - maintain short-term profit target $9-$9.12 before we see a strong but brief downward reaction there .. then we shall see ...
Genting bottoms out at 1.46 first stop 1.60 retrace then maybe 1.65-1.67 before it suffers a strong but brief downward reaction there .
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this also has the obvious disadvantage that it does not cover certain shorter time frame counter trend opportunities that present themselves very frequently ..
for example, a golden single-day or daytrade shorting opportunity presented itself this morning at open ..which runs counter to general uptrend ( for dow , shanghai ) or sidetrend with upward bias( for hsi , sti ) to Bernanke's speech on friday but is still very profitable for shorting at open and closing the short by 5pm. I am sure this shorting will not be very profitable if you hold it for 2 days.
Obviously this short term day-trade bearish event is quite confusing or stressful for anyone who is already heavily committed to the general uptrend on the longer timeframe of a few days to the Bernanke speech at Jackson hole.
a very profitable trade or view in one time frame can be a very unprofitable one in another time frame esp when one is over committed in his trading capital .
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STi should rise to 2815-2825 after bouncing off from 2685-2720 ,, then retrace then maybe 2865-85 ... then retrace then maybe 2915 if Bernanke presents a "QE3 with shock and awe"
Kepcorp should rise to $9 after bouncing off from $8.30-40.
DJ MARKET TALK: More Downside To YZJ, Cosco's GFC Valuations -Kim Eng 22/08/2011 14:54
0653 GMT [Dow Jones] China-based shipbuilders Cosco Corp (F83.SG) and Yangzijiang Shipbuilding (BS6.SG) extend recent falls in heavy volume, down 0.5% at S$0.970 and off 1.6% at S$0.955 respectively, which Kim Eng puts down to "a grimmer outlook" for Chinese shipbuilders "in the face of a slower order flow and rising costs from labour, raw materials and yuan appreciation." It notes Cosco is down almost 60% from its January 2011 high of S$2.42. It says in 2008, Cosco traded at trough P/B of 1.44X and applying the same multiple translates to floor value of S$0.77, based on NAV of S$0.535. It adds Yangzijiang is acknowledged as one of the more efficient shipyards in China, but "we do not think it will be immune to the current predicament." Further, Yangzijiang traded at trough P/B of 1.2X during the global financial crisis, implying a floor value of S$0.75, though the house notes continued share price weakness has prompted several insiders, including its Executive Chairman, to resume open market purchases. (matthew.allen@dowjones.com)
Bill E's Take : I think Cosco has found a temporary bottom at 96c .
DJ MARKET TALK: Daiwa Starts Cosco Corp. At Underperform,Target S$1.00
0057 GMT [Dow Jones] STOCK CALL: Daiwa initiates Cosco Corp. (F83.SG) at Underperform with a S$1.00 target price. "We believe Cosco Corp Singapore's premium to its peers over the past three years is no longer justified, due to: its exposure to bulk shipping, and the operating profit-margin contraction trend," the house says. It expects Cosco's share price to derate from its above-average and higher-than-peers' P/E. It notes the shipbuilder's operating-profit margin has been falling since it started on new offshore rig-building projects; "this trend was confirmed in the 2Q11 results." It adds, Cosco's exposure to bulk shipping is negative given the current oversupply of ships and weak demand due to the global economic slowdown. "Notwithstanding the about 70% fall in the share price since the company announced worse-than-expected 2Q11 results (Aug. 1), we expect further share-price downside from further negative margin surprises." The house prefers Keppel (BN4.SG), rated Outperform, for "its better operational efficiency, earnings outlook, and attractive valuations." Cosco shares closed down 1.8% at S$1.11 Tuesday. (matthew.allen@dowjones.com)
Note : Cosco share price and Daiwa's target price is fast approaching our unwavering 90c call made on 10 Aug 2011 ...( despite the recent sharp general market rebound with Buffet bullish prompting and cosco analysts' consensus target calls above $1.20 ) see http://sgxswinger.blogspot.com/2011/08/cosco-70c-here-we-come.html
18/08/2011 15:19 DJ MARKET TALK: HSI Off 1.1%; Recent Rebound Is Over - Strategist
0718 GMT [Dow Jones] The HSI is down 1.1% at 20,048.23, extending losses as it tracks the China bourses, with the Shanghai Composite falling 1.6%. "I think the recent rebound to Wednesday's high of 20,504 from last week's trough of 18,868 (set Aug. 9) is over. Now, investors are taking profits, triggering some selling pressure," says Linus Yip, strategist at First Shanghai. He tips the HSI in a 20,000-20,500 range, and says if it falls below 20,000, its Aug. 9 trough of 18,868 should serve as a strong support ahead. China Mobile (0941.HK) is down 0.7% at HK$75.10 after reporting its interim results at the midday break. Bank of Communications (3328.HK) is down 1.7% at HK$5.76, on profit-taking after the stock rose 5.4% over the past three sessions, ahead of its results, expected after the market close today. Volume is modest at HK$56.06 billion. (susanna.tai@dowjones.com)
Most European stocks retreated as German Chancellor Angela Merkel and French President Nicolas Sarkozy rejected an expansion of the region’s rescue fund and rebuffed calls for joint euro borrowing.
By Julie Cruz - Aug 17, 2011 4:37 PM GMT+0800
Most European stocks retreated as German Chancellor Angela Merkel and French President Nicolas Sarkozy rejected an expansion of the region’s rescue fund and rebuffed calls for joint euro borrowing. Photographer: Fabrice Dimier/Bloomberg
European stocks fell as German Chancellor Angela Merkel and French President Nicolas Sarkozyrejected an expansion of the region’s rescue fund and rebuffed calls for joint euro borrowing. Asian shares were little changed and U.S. index futures dropped.
DJ MARKET TALK: UOBKH Keeps Genting At Technical Sell; Eyes S$1.40 ..
0239 GMT [Dow Jones] STOCK CALL: UOB KayHian maintains its technical Sell call on Genting Singapore (G13.SG), with a revised technical target price of S$1.40. It notes its previous Sell target price on August 5 of S$1.62 was met on Thursday, and the stock is trading below its moving averages; "it may fall further as it is not able to break above S$1.78." The house notes RSI has lost its momentum and both MACD and its signal line are pointing down, "alternatively, investors may consider exiting their shorts if prices break above S$1.85." The house tips resistance at S$1.78 with support at S$1.40. UOB KayHian's institutional research has a fundamental Buy rating on Genting with a target price of S$2.21. Shares are up 1.2% at S$1.69. (matthew.allen@dowjones.com)
Bill E's take : Genting may drift slowly towards 1.46 - my technical downswing target ...
DJ MARKET TALK: Genting Singapore 2Q EBITDA Below Expectations
0032 GMT [Dow Jones] Genting Singapore (G13.SG) may come under pressure after its 2Q11 earnings fall below expectations; the casino operator posted revenue of S$728.7 million, down 21% on quarter, while EBITDA was S$347 million, down 34% on quarter, lower than the S$378 million tipped in a Dow Jones poll of seven analysts. Daiwa says the sequential falls in revenue and EBITDA were attributable to a lower win rate of 2.66% (vs 3.8% for 1Q11) and a 13% on-quarter drop in rolling-chips volume, while the volume for mass market and slots remained stable. It notes RWS saw its market share in gross gaming revenue decline to about 50% in 2Q11 (from 60% in 1Q11). "We see the market-share changes as unexciting for Genting." Morgan Stanley says while Genting's share of Singapore's gaming market fell, the whole market also declined; "Singapore GGR dropped by 5% on quarter to US$5.65 billion in 2Q11, a significant divergence from Macau." The house also remains concerned that Genting's growth is limited by capacity. Shares closed Friday +2.7% at S$1.725. (matthew.allen@dowjones.com)
DJ MARKET TALK: BNPP Starts Cosco Corp. At Reduce; S$1.54 Target
0331 GMT [Dow Jones] STOCK CALL: BNP Paribas starts Cosco Corp. (F83.SG) at Reduce with a S$1.54 target. It says interviews with Cosco's Korea, Hong Kong, and China peers suggest "the bulk carrier shipbuilding industry is likely to suffer the biggest hit from 2012-2013" due to a mix of reasons, including further capex cuts by shipping companies, capacity over-supply for both shippers and yards, and potential poor margins on orders received in 2010-2011. The house adds, "the market-anticipated asset injection from the parent company is unlikely in the foreseeable future, according to management." BNPP sees two trends emerging in 2012: "smaller operators under-quoting new bids to keep the cash flow and yards running, and order cancellations/postponements in case the potential supply glut is worse than expected." The house says its 2012-2013 forecasts are about 20% below consensus "and we expect significant earnings downgrades when consensus starts to realize the severity of collateral damage from the lower-price orders, CNY appreciation, and inflationary cost pressures." Shares are up 1.0% at S$1.94. (matthew.allen@dowjones.com)
Euro-area leaders may accept a temporary Greek default and ease the terms on bailouts to cash-strapped nations as they intensify efforts to resolve the 21-month sovereign debt crisis, officials said.
With Greece being charged about 35 percent to borrow for two years, heads of government meeting in Brussels may cut theinterest rates on loans to it, Portugal and Ireland to about 3.5 percent and double the repayment period to at least 15 years.Europe’s main rescue fund may get the power to buy bonds from investors, help countries recapitalize banks and offer precautionary lines of credit to repel speculative attacks.
Policy makers are meeting for the second time in a month in a bid to calm Greece’s financial distress and inoculate Spain and Italy from it. Their previous crisis-fighting measures failed to placate investors and the sight of markets in turmoil this week drew calls for tougher action from the U.S. andInternational Monetary Fund.
Seeking to ensure bondholders contribute more to bailouts even if that risks a temporary default being declared, the policy makers considered a 90 percent swap of Greek bonds outstanding between now and 2020, said two officials familiar with the negotiations. The talks are focused on a default lasting just a few days, one said.
To contact the reporters on this story: Simon Kennedy in Brussels at skennedy4@bloomberg.net
To contact the editors responsible for this story: Craig Stirling at cstirling1@bloomberg.net
DJ MARKET TALK: STI Off 0.5%; Sell Into Strength;Outlook Bearish-UOB 06/06/2011 12:43
0442 GMT [Dow Jones] The STI is down 0.5% at 3128.65 midday, falling along with regional markets after Friday's weak U.S employment numbers, which capped a week of disappointing data from the world's largest economy. Volume is light, at 433 million shares worth S$331 million, with trade subdued amid holidays in Hong Kong and China; decliners outnumber gainers three to one. UOB KayHian says, "investors should look to sell into strength as the outlook remains bearish for the moment." It notes the STI is "trading dangerously close" to its 12-day and 26-day moving averages; "a slip below the 26-day moving average (at 3126) could see the index declining to the next minor support at 3100." Artivision (5NK.SG) is off 2.3% at S$0.215 (vs its S$0.245 intraday high) with 118 million shares traded, today's most active. Neptune Orient Lines (N03.SG) leads declines on the STI, as the container shipper is seen as being the most vulnerable to a slowdown, which will hurt trade; it's down 2.2% at S$1.75 in active trade. (matthew.allen@dowjones.com)
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Kepcorp suffers down reaction at 11.60, expect small correction , to hit strong support 11.30 of our old trading band ( 10.30 - 10.60) then next support 11.20 then 11.06
final support , if hit , at $10.90 - $11 is a screaming buy.
Pure Commodity Coal Mining Stock StraitsAsia Resources breaks out of long holding wedge pattern on new coal mining license and higher coal prices on increased china demand - next resistance $3.20 then maybe $3.27 followed by $3.36 if market conditions are good though highly unlikely in next few days given STi is near strong resistance at 3180
Cosco's recent share price plunge was partly attributed to financial difficulties at one of its biggest client - Sevan Marine which is reportedly on verge of bankruptcy .. In March this year , Cosco signed a letter of intent with Sevan drilling for EPC and installation contracts for two of its trademark cylindrical drilling units ( see photos below ) , worth around US$525 million each, with an option for two more rigs.
According to Upstreamonline latest report on 27 May 2011 14:24 GMT , " High-powered Norwegian investor Jens Ulltveit-Moe has reportedly acquired a stake in floundering floating production outfit Sevan Marine. " ( see http://www.upstreamonline.com/live/article258825.ece for full article entitled 'White knight' rides in for Sevan ) . ********************************************************************************
Sevan in Happier Times ...
Sevan Driller at Cosco Yard in celebrative mood , ready for tow-away
