Singapore shares rose for the third consecutive session and were
headed for their biggest daily rise in more than a week,
tracking a rebound in global equity markets on easing worries
about an imminent end to the Federal Reserve's bond buying.
The benchmark Straits Times Index rose 1.4 percent
to 3,147.28 points. MSCI's broadest index of Asia-Pacific shares
outside Japan gained nearly 2 percent, pulling
away from an 11-month low hit earlier this week.
A further drop below 3,000 points would make Singapore
stocks a good buy, said CIMB in a research note. It upgraded the
Singapore market to "neutral" from "underweight" as valuations
have come off with worries about the end of cheap money.
"In a slower-growth world with less impetus for multiple
expansion, we look for stocks with earnings growth drivers,"
CIMB analyst Kenneth Ng said.
He gave preference to banks over REITs (real estate
investment trusts), and favoured developers rather than
DBS Group Holdings Ltd is CIMB's top banking pick
for its trade finance success and earnings delivery from
multiple fee income streams.
CIMB also favours Thai Beverage PCL as it has the
best exposure to ASEAN consumers. Other stock picks include UOL
Group limited, CapitaLand Ltd, Global
Logistic Properties Ltd and Keppel Corporation Ltd
(Reporting by Rujun Shen; Editing by Sunil Nair)
0955 STOCKS NEWS SINGAPORE - Rising rates will hurt rig
builders' margins - Religare
Rising interest rates will squeeze margins of rig builders,
as drilling companies try to pass on increased financing costs
to them while the rig building market has become more
competitive with Chinese yards churning out more rigs, said
Federal Reserve Chairman Ben Bernanke said last week that
the U.S. economy was expanding strongly enough for the central
bank to begin slowing the pace of its monetary stimulus later
this year, sending yields of drilling companies' bonds up.
"Given the substantial debt financing involved in rigs, when
rates rise then somebody's profitability needs to be impacted
and those with the weakest pricing power within the value chain
are most likely to be hit," Religare analysts wrote in a note.
"Offshore yards will have much weaker pricing power vs.
drillers going forward due to Chinese yards dramatically
increasing the supply of rig building capacity."
Singapore's Keppel Corporation and Sembcorp Marine
Ltd have seen their profit margins pressured by
competition from shipyards in China that are eagerly waiting to
enter the offshore oil and gas equipment industry.
Religare maintained a "sell" call on Sembcorp Marine and a
"hold" recommendation on Keppel Corporation.
Keppel shares had fallen 1.8 percent so far this year and
Sembcorp Marine was down nearly 7 percent, lagging behind the 1
percent loss in Singapore's benchmark Straits Times Index