Genting Singapore shares down as Casino stocks get a drubbing on LV Sands results

ML's Take: 

Sands China share is suspended this morning. In pre-suspension, it is down HK28cents. Sands says it call for this halt, to allow investor to ponder over the results release overnight. However, its share continue to tumble after the halt is lifted. 

 Asia Casino stocks fell this morning across the board, taking the lead from LV Sands overnight weakness. This is despite LV Sands reporting narrowing losses. Seems like market has over-factor in their expectation for Sands Macau operation.

In the same vein, this may be the case for Genting Singapore as well, with the counter falling below S$1 this morning. Adding to this pressure is the fact that Genting has a mandatory conversion for its convertible bond today with a conversion price of 95cents. This will add to the selling pressure on this counter.Support at S$0.95.

 Article from Reuters below:

Deena Beasley

LOS ANGELES

Wed Feb 17, 2010 6:58pm EST

Stocks

   

LOS ANGELES (Reuters) - Las Vegas Sands Corp (LVS.N), the casino operator run by billionaire Sheldon Adelson, narrowed quarterly losses, but disappointed investors hoping for even better results from its Macau operations.
Hot Stocks
Its shares slid nearly 6 percent as the results met Wall Street expectations, but fell short of the most bullish forecasts, with weakness in Las Vegas offsetting strong gambling demand in the former Portuguese enclave in China.
"I think people were expecting a beat," said Keybanc Capital analyst Dennis Forst.
Some analysts said the market had hoped for better from Macau, viewed by investors as the crown jewel in the company's portfolio.
Soleil Securities said in a research note the company's profit margins, particularly in Macau, were less than expected.
Gambling revenue in Macau, the only place in China were gambling is legal and the source of the majority of Sands' operating income, has soared in recent months -- jumping nearly 65 percent in January.
Sands, which sold a stake in its Macau operations in a public offering in November, posted a net loss of $113.9 million, or 17 cents a share, in the fourth quarter compared with a year-earlier loss of $136.5 million, or 27 cents a share.
Excluding items such as expenses to open a new resort in Singapore, Sands earned 3 cents a share, matching the average analyst forecast, as compiled by Thomson Reuters I/B/E/S.
Operating income at the company's Venetian Macao resort nearly doubled to $119.7 million during the quarter, while operating income at the Sands Macao rose 13 percent to $43.9 million.
In Las Vegas, where citywide gambling revenue has begun to stabilize, but room rates are still heavily discounted, Sands had an operating loss of $15.7 million.
"In my view, Vegas underperformed and Macau outperformed," Forst said.
Chairman and Chief Executive Adelson said Sands has done well in Macau -- where earnings before interest, taxes, depreciation, amortization and rent (EBITDAR) rose a "whopping" 48 percent in the fourth quarter -- by focusing on mass gaming, hotel and retail businesses, while controlling costs.
Sands said $50 million of its Macau EBITDAR came from gambling "hold," or luck on the part of its casinos.
The company acknowledged that results in Las Vegas have been hurt by lower room rates and less revenue from food and beverages. Competition continues to cap room rates, but Adelson said business is returning to Las Vegas, with group business up 20 percent in the first 40 days of 2010.
Overall net revenue for the quarter rose 17 percent to $1.28 billion, beating the $1.23 billion expected by analysts.
Sands owns the Palazzo and Venetian resorts on the Las Vegas Strip, two casinos in Macau and a casino in Pennsylvania. The Las Vegas-based company said its next gambling resort -- located in the city-state of Singapore -- will begin opening in late April.
Sands, which has come close to violating loan agreements and suspended construction on several projects, resumed work on additional Macau projects late last year.
The company said the first phase of these projects, located in an area of Macau known as the Cotai Strip, will open in June 2011, with the next phase following about six months later.
Sands officials discounted any impact on its Macau operations from monetary tightening by the Chinese government, saying that most of the company's business in Macau is from mass market customers who do not rely on credit.
The company said it will report results for Hong Kong-listed Sands China Ltd (1928.HK) on March 1.
Sands shares, which hit an all-time low of $1.38 last March, fell to $16.44 after hours after closing down 0.6 percent at $17.46.
(Reporting by Deena Beasley; Editing by Andre Grenon, Bernard Orr)

This blog is a selections of my investment views to my client. If you find it useful or have additional information to share, please do let me know. These blogs are my personal views and is not meant to solicit any sales or investment on any securities or investment. I may have vested interest in some of the counters or investment products, hence please invest at your own risk. As usual invest in what you understand and do your own homework.


ML is a licensed stockbroker with one of Asia Leading Stock Broker firm. To contact him, please email: icewolfmike@gmail.com

China raise bank reserve requirement to 16.5% - my perspective of the move

China Raises Bank Reserve Requirement to Cool Economy

ML's quick take:

a) A surprise hike by PBOC in term of timing, more specifically the speed of it. However, announcing this after the close and on "eve" of CNY will allow the market to absorp the news and avoid another rout in the stock market.

b) The hike in capital requirement, is a move to draw out liquidity from the system and to rein in runaway bank lending. This move is expected to draw out around 300b of liquidity from the banking system versus 4trillion that has been pumped into the system and the 1.39t of loan that has been given out. Hence, it is important to look at this from a relative perspective.

c) It is actually a good thing that china is tightening at the early part of the year. This will avoid the double whammy of China, US and EU all tightening at the same time, which is largely expected in the 2H of the year - a sure ingredient for a double dip recession! And I believe the Chinese authorities wants to avoid this.

d) This move will not be the last. In fact, it show that the Chinese government willingness to act quickly if needed and show that the growing savviness in managing inflation in the country. Beside capital requirement, expect more move to raise the benchmark interest rate. Market will eventually get use to it.

e) Note how the market react to the news from china. This show China growing force in the world economy.

f) Note how the Dow rally off the low at the close to stay above 10,000. Technically, that is a positive sign as it demonstrate the emergence of new bull and the remnant bear in the market.

I expect some initial softness in STI on its opening next week, but I will look for weakness to go long. I am still targeting bluechip stock, specifically, those with FY09 result on the horizon. Majority are short term trade, with tight stop (using recent low).

With this I sign off from the year of the OX, as we step into the year of the TIger.

Wishing all of you Hu Hu Sheng wei, Hu nian sing da yun!

Below is an article on the move by Bloomberg.

Feb. 12 (Bloomberg) -- China ordered banks to set aside more deposits as reserves for the second time in a month to cool the fastest-growing economy after loan growth accelerated and property prices surged.
The reserve requirement will increase 50 basis points, or 0.5 percentage point, effective Feb. 25, the People’s Bank of China said on its Web site today. The current level is 16 percent for big banks and 14 percent for smaller ones.

Stocks reversed gains in Europe after the announcement on concern that tighter lending in China will damp the global economic recovery. Policy makers aim to avert asset bubbles and restrain inflation after banks extended 19 percent of this year’s 7.5 trillion yuan ($1.1 trillion) lending target in January and property prices climbed the most in 21 months.

“This is all about controlling the boom, so that we don’t have a bust in the second half,” said Stephen Green, head of China research at Standard Chartered Bank Plc in Shanghai.
The central bank moved after Chinese markets closed and on the eve of a weeklong Lunar New Year holiday when the nation moves into the Year of the Tiger from the Year of the Ox.
Europe’s Dow Jones Stoxx 600 Index temporarily regained ground on better-than-estimated corporate earnings and a stronger-than-forecast increase in U.S. retail sales before declining again. The Shanghai Composite Index rose 1.1 percent before the announcement.

Avoiding ‘Overheating’
Record lending and a 4 trillion yuan stimulus package have helped the nation to lead the recovery from the first global recession since World War II.

“With China’s increasing economic significance in the world economy, major policy moves will always touch a nerve with global markets,” said Qu Hongbin, chief China economist at HSBC Holdings Plc in Hong Kong. “Still, timely tightening in China will help sustain growth and avoid overheating, benefiting the world in the long term.”

Investors’ concern about investment bubbles in China, and what action the government may take to prevent or deflate them, has mounted this year.

“There’s a monumental property bubble and fixed-asset investment bubble that China has underway right now,” hedge fund manager James Chanos, founder of New York-based Kynikos Associates Ltd., said in a Jan. 25 Bloomberg Television interview. “Deflating that gently will be difficult at best.”

‘Crisis Mode’
The decision to raise the reserve requirement ratio doesn’t signal a change in monetary policy, the official Xinhua news agency said, citing an unnamed official from the central bank. Officials will maintain their moderately loose monetary policy, the report said.
The central bank said yesterday that it wanted to gradually normalize monetary conditions from a “crisis mode” after gross domestic product grew 10.7 percent in the fourth quarter, the fastest pace in two years. It also said that not all countries will exit stimulus policies at the same time.
Policy makers are yet to drop the yuan’s effective peg to the U.S. dollar, which was adopted in July 2008 to aid the nation’s exporters, stoking friction with the U.S. and Europe.

Recovery Bets
Credit Suisse Group AG. estimated that today’s move will remove about 300 billion yuan from a financial system also facing inflows of cash from investors betting on the nation’s recovery and likely gains by the yuan. The nation’s foreign- exchange reserves swelled to a record $2.4 trillion in December, partly on inflows of “hot money,” or speculative capital.

“The central bank will keep raising the ratio frequently until the middle of the year,” said Lu Zhengwei, a Shanghai- based economist at Industrial Bank Co., who predicted today’s increase. “The central bank wants to stay ahead of the curve by tightening before inflation starts to gain pace.”
He forecast an increase in the benchmark lending rate from 5.31 percent as early as April.
In contrast, Citigroup Inc. said the central bank may not raise rates until the third quarter as inflation stays “mild.”

Consumer prices rose 1.5 percent in January from a year earlier, down from 1.9 percent in December, on smaller gains in food prices. Inflation will accelerate to 3.6 percent by the end of June, according to a

Bloomberg News survey of economists.
“Raising the reserve ratio on the eve of the Chinese New Year holiday really makes a lot of sense as it will give markets time to react,” said Mark Williams, an economist at Capital Economics Ltd. in London.

Property Prices
Economic data this week showed property prices across 70 cities surged 9.5 percent in January from a year earlier, exports climbed and producer-price inflation accelerated. Bank lending of 1.39 trillion yuan topped the total for the previous three months combined.
The central bank on Jan. 12 increased banks’ reserve requirements for the first time since June 2008. The latest move will soak up liquidity from maturing central-bank bills and also money injected into the financial system for the coming holiday, China International Capital Corp. said.
At Morgan Stanley, Hong Kong-based economist Wang Qing said that today’s increase would counter foreign-exchange inflows which “must have been persistently strong since January” and also withdraw money added for the holiday.
Reserve-requirement increases will continue through 2010, Wang said. “The market should get used to it.”

This blog is a selections of my investment views to my client. If you find it useful or have additional information to share, please do let me know. These blogs are my personal views and is not meant to solicit any sales or investment on any securities or investment. I may have vested interest in some of the counters or investment products, hence please invest at your own risk. As usual invest in what you understand and do your own homework.

ML is a licensed stockbroker with one of Asia Leading Stock Broker firm. To contact him, please email: icewolfmike@gmail.com

When will Asia stock market rebound? Maybe only in March

This is an interesting article from MarketWatch
Chinese stocks have put in an anemic performance so far this year, despite the nation's strong economic recovery, and one group of analysts say investors may have to wait until March for a significant upturn.
Part of the problem are upcoming data releases, which will likely continue to feed worries about further policy tighteningto prevent the economy from overheating, according to Macquarie Group Asia strategist Michael Kurtz and analyst Shirley Zhao.
Kurtz and Zhao said that, timing-wise, it may not be until the Chinese Communist Party's annual National People's Congress in March that investors may again begin to grow comfortable with Beijing's policy outlook.
By then, most Chinese companies will have released their 2009 corporate earnings, which the analysts said will likely be strong and could provide an additional trigger for market gains.
"China's next couple of months of data may continue playing directly into the 'sell inflation/buy exports' trade ... as base-effect distortions from a bombed-out first quarter of 2009 substantially elevate the 2010 [year-on-year comparison] readings on both China's headline inflation and exports," they said.
China released January trade data Wednesday showing a narrowing of the trade surplus, though analysts said the monthly figures for January and February are hard to read due to distortions from the Chinese New Year holiday.
Meanwhile, the Macquarie analysts also cited data on money flows from China-dedicated long-only fundsas showing that they have pulled out some 20% of their total net subscriptions last year, in "a liquidation so large as to seem itself unsustainable."
The Shanghai Composite now is among the worst performing benchmark indexes in Asia so far this year, having lost about 9.5%. In Wednesday's morning trading, the index was at 2,967.03, up 0.6% from the previous close.
The Hang Seng China Enterprises Index, a benchmark tracking performance of large-capital Chinese shares listed in Hong Kong, has even sharper losses under its belt, having dropped 12.5%, while Hong Kong's benchmark Hang Seng Index has given up around 9% so far in 2010.
The Hang Seng was flat at 19,782.88 in Wednesday's morning session, while the HSCEI rose 0.5%.
Even shares of commodity producers in Australia and exporters in Japan, Taiwan and South Korea have all performed weakly in recent weeks due mainly to worries about Chinese policy tightening, given that China is a major importer of raw materials and is increasingly a major buyer of consumer goods.
Hope Of Greece Rescue Boosts Asia
Asian shares are lifted by hopes that the EU will craft a rescue plan for Greece and other troubled euro-zone economies. Dow Jones Newswires' Mark Cranfield reports.
The Macquarie analysts listed Hong Kong-traded Chinese shares, better known as H-shares, as attractive bets.
"In addition to value, dividend yield has become increasingly attractive, as markets remain choppy and indecisive," they said.
Among H-shares, they said Bank of China Ltd., China Shenhua Energy Co., Aluminum Corp. of China, China Petroleum & Chemical Corp., Nine Dragons Paper Holdings and Weichai Power Co. were stocks trading at a sharp discount to their historic valuations after the recent correction.
Macquarie also named China Southern Airlines Co. as a stock likely to benefit from a potential yuan appreciation, and rated China Telecom Corp. as a "value play."
Industrialized nations have been mounting pressure on China to let the yuan appreciate against major currencies. Chinese authorities have kept the local currency in a very tight range around 6.82 yuan to a U.S. dollar for more than a year.

My take:
Chinese policy makers intention is pretty clear but market will only settle down after the central sit down for their annual meeting march to put everything down in black and white. In any case, I believe that March is a reasonable time frame, as by then most of the news out there should have been absorbed by the market.
Also by then, we should have a clearer picture of at least 1H10 for the US market, and hopefully a good strong resolution for the European sovereign debt issue.
Until then, market will remain volatile with volume staying thin. Genuine buying interest are still thin, and this will keep the market choppy.
However, if you do see March as a good time for stock, then perhaps February after CNY, is a good time for some bargain hunting.

This blog is a selections of my investment views to my client. If you find it useful or have additional information to share, please do let me know. These blogs are my personal views and is not meant to solicit any sales or investment on any securities or investment. I may have vested interest in some of the counters or investment products, hence please invest at your own risk. As usual invest in what you understand and do your own homework as usual.

Europe in crisis and what does Piigs got to do with Asia (or US) Stock Market?

Portugal, Ireland, Italy, Greece, Spain (or PiIGS) are representing European pride in the upcoming 2010 World Cup.

Unfortunately, they are now also blamed by the market for testing the Eurozone unity.

Growing concerns about their deficit and concerns (i stress the word "concerns") about their inability to service their debt is rattling capital market worldwide. Technically, none of these countries has actually defaulted on their debt or raise issue repaying their debt.

The heart of the problem here is not so much as of their debt, but the question is on the overall unity of the Eurozone members and the political willingness of the bigger players (Germany and France) to bail out their poorer neighbours in time of need.

With the world just on its recovery path, and European economies still struggling to find it footing, the financial market pirate (if you believe in the financial world conspiracy theory) saw a candidate ripe for some plummeting. This is especially so with the Eurozone just undergoing a recent transition of new leaders and, not to mention, an European Central Bank president, Jean-Claude Trichet, which many views as inept..(looking at his recent statement that EU will never bail out Greece...I tends to agree with this view)...the market is testing the theory that EU will have issue coordinating a rescue of their own version of a major financial crisis.

So what does this got to do with Asia...or even the US? Well, there is always the contagion effect theory. However, from lessons from the Asia Financial Crisis, and the recent US Sub-prime meltdown...I believe the key impact will still be on ground zero.

Yes any crisis in Europe will definitely further slowdown the recovery process, but PiIGS ultimately is not US, nor France, nor Germany and hence I do not see this having a key economic impact on Asia recovery.

OK...the Euro may be vulnerable you may argue. But it is almost unimaginable that Germany and France will actually allow the pride of Euro to go into tatters...even thou politically they will not say so.

The pirate will keep looking for bad news to short the market after the run up in stock prices since march 2009, but I am betting on this as a correction rather than a return of the real bear market for now.


I have attached here a revised chart of DJIA, HS and STI showing their respective support levels. Looks like there will still be some downside ahead, but I still see the market to be supported until the major trendline is broken.

2010 will prove to be a volatile year...and only the brave and nimble will prevail.

God bless!















This blog is a selections of my investment views to my client. If you find it useful or have additional information to share, please do let me know. These blogs are my personal views and is not meant to solicit any sales or investment on any securities or investment. I may have vested interest in some of the counters or investment products, hence please invest at your own risk. As usual invest in what you understand and do your own homework as usual.

Keppel Corp won 1 Billion contract from Brazil - on an uptrend!

SINGAPORE, Feb 1 (Reuters) - Keppel Corp ( KPLM.SI ), the world's largest oil rig builder, on Monday said it has won a $1 billion contract with a joint venture partner to build and operate a rig platform in Brazillian waters.
The contract, Keppel's largest rig deal in over two years, was clinched by a joint venture between Keppel and J. Ray McDermott, a unit of U.S.-listed McDermott International ( MDR.N ). The deal will bolster Keppel's order book, which has been falling over the past year and stood at $5.6 billion at end-December.
The contract was awarded by a Petrobras ( PETR4.SA )-Chevron ( CVX.N ) joint venture.
Keppel said the P-61 tension leg wellhead platform will be deployed in Brazil's Papa-Terra field in the Campos Basin and will operate alongside a floating production storage offloading vessel to handle up to 180,000 barrels of oil per day.
"Brazil's offshore sector is embarking on a very exciting phase with many of Petrobras' new projects put on fast-track," Chow Yew Yuen, president of Keppel Offshore & Marine USA, said in a statement.

My take (this is written before i saw the contract but should be relevant except that Target price may be higher now):
Good buying interest over past 3 days (3 white candle) but note that this comes from a very low base. The RSI index still within range and have not actually reach overbought region,

Personally I believe can still hold on to this counter, but it may hit resistance at 8.66 to 8.70 region in the near term, but with this contract I expect it to try for a new high (prelim target 8.80). If you can hold longer and do not want to trade, this counter is still on an uptrend (as suggested by higher high and higher low it has been achieving over the past months).

Fundamental looks promising with a strong order book. Recent win of oil rig project is also a good sign that the oil exploration project may be on a rise.

For your consideration. This is my personal opinion.

This blog is a selections of my investment views to my client. If you find it useful or have additional information to share, please do let me know. These blogs are my personal views and is not meant to solicit any sales or investment on any securities or investment. I may have vested interest in some of the counters or investment products, hence please invest at your own risk. As usual invest in what you understand and do your own homework as usual.