Chinese Bank Shares Drop After Reserve Ratio Hike
Shares in major Chinese banks fell in Hong Kong on Monday after China raised the proportion of deposits that lenders must keep in reserve at the central bank, in a move to rein in inflation and mop up excess liquidity.
By 0251 GMT, the Hong Kong-listed shares of Industrial and Commercial Bank of China, the world's most valuable lender, were down 1.2 percent, similar to China Construction Bank's decline.
The benchmark Hang Seng was down 1.33 percent.
"There's going to be a lot of volatility, and investors must be prepared for that," said Sarah Wu, an analyst at Macquarie who is still overweight on Chinese banks.
"The issue right now is still on the government policy clarity front, and that remains the biggest overhang for the sector."
Smaller rivals Bank of China and Bank of Communications were down 1.5 percent and 2.3 percent, respectively.
On Sunday, China's central bank said it was lifting lenders' reserve requirement ratioby 50 basis points effective May 10, its third increase of that magnitude this year.
Chinese stock markets are closed for a holiday on Monday.
Fears that Beijing may further tighten monetary policy by raising the cost of lending have weighed on Chinese stocks this year, with China's stock markets the worst performing in Asia so far since January.
China has already said it aims to reduce new lending nationwide by 22 percent this year to 7.5 trillion yuan ($1.1 trillion), and banking regulators have repeatedly urged banks to be cautious when extending new loans.
ICBC is down over 11 percent so far this year, while CCB has shed 4 percent and BoCom is down about 2 percent.
ML's Take:
Chinese Tightening is not surprising. Have seen this coming since early part of the year. The most important questions is what next and how much more to go.
Recent data seems to suggest that the chinese economy is still powering ahead and housing prices are still on a high. Do expect more tightening ahead and this will keep a cap on chinese banks stock growth.
However, do note that stock tends to fall on initial tightening, but will rise going forward as tightening is a often a sign of strength in the economy. I still am a bull in stock, and see the improving economy as the foundation for stronger stock price.
Nonetheless, do not that interest rate environment is still generally low throughout, so the initial tightening will be the immediate effect that you will see.
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
Tuesday, May 4, 2010
Monday, April 26, 2010
Yangzijiang Shipbuilding, Baker Tech, Sembmarine - Fight over PPL
Baker Tech has accepted the offer to sell its stake in PPL Holdings (PPLH) to a consortium led by Yangzijiang Shipbuilding (YZJ), which is not surprising given the attractive offer price. The sale is subject to shareholders’ approval in an EGM (to be convened) and we note that Saberon Investments Pte Ltd, Baker’s controlling shareholder with about 69.63% stake, has agreed to vote in favour of the sale. However, not
everyone is happy with the deal, Sembcorp Marine (who has a 85% interest in PPL Shipyard) has alleged that the sale would be a circumvention of its pre-emptive rights by not giving it a first right-of-refusal over the sale. On this note, Baker Tech’s lawyers have said that Sembcorp Marine “has no basis for its claims”. A drawn-out tussle for PPLH may affect YZJ’s offshore initiatives. We maintain our HOLD rating on YZJ with S$1.60 fair value estimate.
(Low Pei Han)OCBC.
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
everyone is happy with the deal, Sembcorp Marine (who has a 85% interest in PPL Shipyard) has alleged that the sale would be a circumvention of its pre-emptive rights by not giving it a first right-of-refusal over the sale. On this note, Baker Tech’s lawyers have said that Sembcorp Marine “has no basis for its claims”. A drawn-out tussle for PPLH may affect YZJ’s offshore initiatives. We maintain our HOLD rating on YZJ with S$1.60 fair value estimate.
(Low Pei Han)OCBC.
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
Friday, April 16, 2010
Noble Group - Macarthur's major shareholder warm toward Peabody latest bid
Macarthur has received responses from POSCO and ArcelorMittal as follows:
POSCO
“Subject to the Macarthur Board recommending Peabody’s proposal to its shareholders (in the absence of a superior proposal), and to POSCO considering and agreeing the key terms of its ongoing investment in Macarthur (a process which we could complete in a timely manner), POSCO confirms its in-principle support for a Peabody-led privatisation of Macarthur in the absence of a superior proposal. POSCO presently intends to retain its existing economic interest in the resultant private company structure.
For the avoidance of doubt, POSCO does not have, and it does not propose to enter into, any agreement arrangement or understanding (binding or otherwise) with Peabody relating to Macarthur, any power to exercise (or control the exercise of) a right to vote Macarthur shares, or any power to dispose of (or control the exercise of a power to dispose of) Macarthur shares.
POSCO will continue to carefully monitor and analyse all developments ahead of the EGM and reserves the right to vote its shareholding at the EGM in any manner that it determines in its absolute discretion.”
ArcelorMittal
“Although not providing [a] specific decision as to how ArcelorMittal will vote at any shareholders' meeting, ArcelorMittal does recognise that the Peabody offer is one that warrants MCC giving it due consideration and providing them the necessary time for the 5 days due diligence that [Peabody] have sought from MCC Board. ArcelorMittal will continue to carefully monitor developments in relation to MCC.”
A response from CITIC has not yet been received.
The Directors of Macarthur are meeting today, Friday 16 April 2010 to consider Peabody’s Further Proposal.
The Macarthur Board is committed to being in regular contact with shareholders and will keep you informed of future developments. The Macarthur Board reminds shareholders to not have any regard to public statements issued by any third party. Should you have any queries, please contact Macarthur’s shareholder enquiry line on 1300 160 409 (or +61 3 9415 4147).
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
POSCO
“Subject to the Macarthur Board recommending Peabody’s proposal to its shareholders (in the absence of a superior proposal), and to POSCO considering and agreeing the key terms of its ongoing investment in Macarthur (a process which we could complete in a timely manner), POSCO confirms its in-principle support for a Peabody-led privatisation of Macarthur in the absence of a superior proposal. POSCO presently intends to retain its existing economic interest in the resultant private company structure.
For the avoidance of doubt, POSCO does not have, and it does not propose to enter into, any agreement arrangement or understanding (binding or otherwise) with Peabody relating to Macarthur, any power to exercise (or control the exercise of) a right to vote Macarthur shares, or any power to dispose of (or control the exercise of a power to dispose of) Macarthur shares.
POSCO will continue to carefully monitor and analyse all developments ahead of the EGM and reserves the right to vote its shareholding at the EGM in any manner that it determines in its absolute discretion.”
ArcelorMittal
“Although not providing [a] specific decision as to how ArcelorMittal will vote at any shareholders' meeting, ArcelorMittal does recognise that the Peabody offer is one that warrants MCC giving it due consideration and providing them the necessary time for the 5 days due diligence that [Peabody] have sought from MCC Board. ArcelorMittal will continue to carefully monitor developments in relation to MCC.”
A response from CITIC has not yet been received.
The Directors of Macarthur are meeting today, Friday 16 April 2010 to consider Peabody’s Further Proposal.
The Macarthur Board is committed to being in regular contact with shareholders and will keep you informed of future developments. The Macarthur Board reminds shareholders to not have any regard to public statements issued by any third party. Should you have any queries, please contact Macarthur’s shareholder enquiry line on 1300 160 409 (or +61 3 9415 4147).
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
Monday, April 12, 2010
Chart for ST Engineering, Sembmarine and Keppel Corp
I have attached here the chart (6 April 2010) for ST eng, Sembmarine and Kepcorp for your information. Sorry for this late posting...
ST Eng
I like the look of it. The recent upmove is supported by good volume. Also, chart wise it seems like the move is still not exhausted and should have more room for further upside.
3.28 turn from resistance to support with 3.37 as the next resistance level. If 3.37 breach, I expect the counter to attempt 3.55 next.
Keppel Corp
After the strong recent upsurge (which took me by surprise in term of its strength), I believe it may have reached or will be reaching an exhaustion point even thou the RSI is only slightly overbought. However, the surge over the past few days is not really accompanied by good volume. In fact, volume seems to be tailing off which mean that buying may be drying up.
9.60 immediate resistance with next support at 9.50. Expect this to give way for counter to retreat to 9.25 - 9. 12 region. Here it may present good buying opportunity again.
Sembmarine
Showing similar pattern to Kepcorp. May have reached its exhaustion point. Looking toppish at 4.44 and may retreat to 4.25 region. Falling volume as in the case of Keppel Corp.
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
ST Eng
I like the look of it. The recent upmove is supported by good volume. Also, chart wise it seems like the move is still not exhausted and should have more room for further upside.
3.28 turn from resistance to support with 3.37 as the next resistance level. If 3.37 breach, I expect the counter to attempt 3.55 next.
Keppel Corp
After the strong recent upsurge (which took me by surprise in term of its strength), I believe it may have reached or will be reaching an exhaustion point even thou the RSI is only slightly overbought. However, the surge over the past few days is not really accompanied by good volume. In fact, volume seems to be tailing off which mean that buying may be drying up.
9.60 immediate resistance with next support at 9.50. Expect this to give way for counter to retreat to 9.25 - 9. 12 region. Here it may present good buying opportunity again.
Sembmarine
Showing similar pattern to Kepcorp. May have reached its exhaustion point. Looking toppish at 4.44 and may retreat to 4.25 region. Falling volume as in the case of Keppel Corp.
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
Yangzijiang - Dual listing plan. Another one sailing away from SGX.
Yangzijiang Shipbuilding Holdings Ltd (YZJ SP; S$1.29) |
| Yangzijiang requested for a trading halt this morning. |
| Over the lunch break, Yangzijiang clarified that it has received proposals for dual listing on the Stock Exchange of Hong Kong and TDR listings. However, all talks are only exploratory at this juncture. If Yangzijiang does proceed with alternative listing options, our recent meeting with management suggests that a TDR listing in Taiwan is more likely as the listing process may be faster. However, as TDRs are non-fungible, there is a low likelihood for a sustained surge in trading multiples for the SGX-listed shares from higher TDR valuations. Moreover, the closest peer in Taiwan is trading at a lower valuation. |
| Still, we remain bullish on the Company, due to management’s excellent execution record as the company had coped well with industry negatives with zero order cancellation to date, on-schedule deliveries, and ability to secure new contracts of about US$460m in 2009 despite the industry-wide drought and relatively superior margins. |
| Catalysts for the stock include stronger-than-expected order wins and share of profits from its new ship-breaking JVs, and confirmation of TDR listing. |
| YZJ remains one of our two top-picks among S-Chips with potential for dual listings. At the current price, the stock offers 16.3% upside to our target price. |
| Maintain Outperform, target price of S$1.50. CIMB |
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
Ausgroup - benefit from new Iron ore pricing regime?
CIMB-GK MAINTAINED its “Buy” call with a target price of 96 cents on Ausgroup last week, citing its relatively cheap valuation in the offshore & marine universe.
The report was triggered by a structural shift in iron-ore markets in the past couple of weeks as the world’s largest 3 mining companies, Vale, BHP Billiton and Rio Tinto, announced a switch to setting the price of iron ore contracts every 3 months, ending a 40-year system of annual pricing.
The new price system will lift the cost of iron ore to Asian steelmakers to about US$110-$120 a ton for April-June contracts, up 80% to 100% from the US$60 level at which the 2009-10 annual contracts were settled.
CIMB-GK analyst Yeo Zhibin believes that higher iron-ore prices could accelerate capex spending in the mineral resource sector in Western Australia, benefiting specialist construction service companies like Ausgroup.
However for the high profile Gorgon oil & gas project, Australian fabricators such as Ausgroup have been priced out by Asian competitors due to a rising A$.
CIMB-GK expects Ausgroup’s earnings for the financial year ending Jun 2010 to grow 90% year-on-year, given its strong order book of A$470 million.
It has a target price of 96 cents based on 13x CY11 P/E, Ausgroup’s trading average since listing.
”We see stock catalysts from an acceleration in orders wins from LNG and mineral projects, improved margins and further sets of strong results.
”Key risks to our call are execution slippages and lower than-expected order wins,” according to the CIMB-GK report.
CIMB-GK’s bullish report contrasted with OCBC Investment Research's (OIR) update on the Aussie mining resources infrastructure specialist issued 2 weeks ago.
While OIR analyst Meenal Kumar believes that Ausgroup’s 4Q10 (Apr-Jun 2010) revenue will grow sequentially because of completion of works at several LNG projects, she is bearish because of Western Australia’s subdued project tendering activity.
”There is a large potential pool of projects but many players are still taking their time to resume or launch projects due to continuing economic uncertainty.
”Rising costs (especially labour) may be another concern,” according to the her report.
LNG projects that contribute to 2H10 revenues (Jan-Jun 2010) include Woodside's Pluto and BHP Billiton's Rapid Growth Project 5.
OIR has a ‘Hold’ rating and a relatively conservative target price of 60 cents.
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
The report was triggered by a structural shift in iron-ore markets in the past couple of weeks as the world’s largest 3 mining companies, Vale, BHP Billiton and Rio Tinto, announced a switch to setting the price of iron ore contracts every 3 months, ending a 40-year system of annual pricing.
The new price system will lift the cost of iron ore to Asian steelmakers to about US$110-$120 a ton for April-June contracts, up 80% to 100% from the US$60 level at which the 2009-10 annual contracts were settled.
CIMB-GK analyst Yeo Zhibin believes that higher iron-ore prices could accelerate capex spending in the mineral resource sector in Western Australia, benefiting specialist construction service companies like Ausgroup.
However for the high profile Gorgon oil & gas project, Australian fabricators such as Ausgroup have been priced out by Asian competitors due to a rising A$.
30% hike in iron ore prices in Western Australia in just 3 months.
CIMB-GK expects Ausgroup’s earnings for the financial year ending Jun 2010 to grow 90% year-on-year, given its strong order book of A$470 million.
It has a target price of 96 cents based on 13x CY11 P/E, Ausgroup’s trading average since listing.
”We see stock catalysts from an acceleration in orders wins from LNG and mineral projects, improved margins and further sets of strong results.
”Key risks to our call are execution slippages and lower than-expected order wins,” according to the CIMB-GK report.
CIMB-GK’s bullish report contrasted with OCBC Investment Research's (OIR) update on the Aussie mining resources infrastructure specialist issued 2 weeks ago.
While OIR analyst Meenal Kumar believes that Ausgroup’s 4Q10 (Apr-Jun 2010) revenue will grow sequentially because of completion of works at several LNG projects, she is bearish because of Western Australia’s subdued project tendering activity.
”There is a large potential pool of projects but many players are still taking their time to resume or launch projects due to continuing economic uncertainty.
”Rising costs (especially labour) may be another concern,” according to the her report.
LNG projects that contribute to 2H10 revenues (Jan-Jun 2010) include Woodside's Pluto and BHP Billiton's Rapid Growth Project 5.
OIR has a ‘Hold’ rating and a relatively conservative target price of 60 cents.
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
Let the earning season begin....
Earnings Season Is a No-Trading Zone
Published: Friday, 9 Apr 2010 | 10:14 PM ET
By: Tom Brennan
Web Editor, Mad MoneyOn Monday, Alcoa takes the earnings stage, marking the ceremonial start of the season. Cramer’s expecting a “parade of positive reports” this time around, and he’s warning investors not to get lured in.
Of course, strong earnings are a good thing. But when beat after beat is announced they can be too tempting not to trade. One thing Cramer’s learned over his 30 years of trading, though, is that you just can’t make money on these reports. Too many companies are reporting and there’s too little time to do the necessary homework. The Game Plan going forward then is to just sit tight and listen. Cramer on Friday discussed the most important earnings releases of the coming week and what investors should look for. Here they are:
Again, Alcoa [AA 14.39 
-0.48 (-3.23%) 
], the largest aluminum producer in the US, goes first on Monday. The two markets – aerospace and industrial gas – that failed to hit their targets last quarter are at the beginning of “long, positive cycles,” Cramer said. And Alcoa has the cash flows and cost controls necessary to capitalize on them. He recommend maybe buying some AA after the Street dumps it, because he’s expecting the two markets to have a strong second half in 2010.
Among the banks, JPMorgan Chase [JPM 45.98
0.22 (+0.48%) 
]and Bank of America [BAC 18.59 
-0.06 (-0.32%) 
]report in the coming week. Cramer expects vast improvements over last year, enough to possibly push JPM past the $45 level its been stuck at for a while. And while BAC’s report won’t be as clean, with asset write-downs and provision expenses still a problem, Cramer thinks we’ll see a second straight quarter of better credit costs. That could take Bank of America to $20, he said.
Also, one of Cramer’s favorite regional banks, First Horizon National [FHN 15.02
0.15 (+1.01%) 
], releases its numbers. He’ll be looking to see if we can finally confirm that worst is over, he said, “and FHN is now on its way to becoming one of the best banks.”
In tech, Intel [INTC 22.55
0.24 (+1.08%) 
]and Advanced Micro Devices [AMD 9.30 
-0.12 (-1.27%) 
]will gives us a read on the semiconductor cycle. Cramer’s a fan of INTC – his charitable trust owns it – for its new products, the balance sheet and the 3% dividend yield. He thinks the stock right now is cheap too. Also tech in the coming week is Google [GOOG 566.22 
-1.27 (-0.22%) 
]. Cramer wants to hear more about China and what the company thinks about Apple’s move into what was once largely GOOG’s turf: advertising.
Yum! Brands [YUM 40.70
0.63 (+1.57%) 
]will report more than earnings on Wednesday. It will tell us about the strength of the consumer, too. Are they eating out again? Cramer’s only concern is whether or not people are choose Yum’s Pizza Hut if they do. He thinks KFC will save the quarter, thanks to a new spurt in growth in China.
The rails are always some of the best barometers of economic health – because of the products they carry – which is why Cramer’s watching CSX [CSX 52.96
-0.02 (-0.04%) 
]on Tuesday. And the company’s coal loadings, in particular. If those are up, then it might be a chance to buy more Walter Energy [WLT 96.75 
1.24 (+1.3%) 
], Mad Money’s favorite play on metallurgical coal. Cramer likes it up to $100.
PPG Industries [PPG 68.68
0.75 (+1.1%) 
]is the way to play the continued chemical side of the rebound. The “polys” and “ethyls” of this industry are the building blocks of the economy, and they’ve been performing well. Cramer said we’ll probably get more good news about them from PPG on Thursday. If Asia’s has become more than 20% of the company’s business, Cramer thinks the stock could run past $70.
Lastly, there’s General Electric [GE 18.52
-0.04 (-0.22%) 
]– parent company of CNBC. This conglomerate touches on a number of industries, and good earnings from GE often translate into great investments in related companies. Also, GE will give us an idea of worldwide credit conditions, which Cramer said should be “the best they’ve been in three years.”
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
Published: Friday, 9 Apr 2010 | 10:14 PM ET
By: Tom Brennan
Web Editor, Mad MoneyOn Monday, Alcoa takes the earnings stage, marking the ceremonial start of the season. Cramer’s expecting a “parade of positive reports” this time around, and he’s warning investors not to get lured in.
Of course, strong earnings are a good thing. But when beat after beat is announced they can be too tempting not to trade. One thing Cramer’s learned over his 30 years of trading, though, is that you just can’t make money on these reports. Too many companies are reporting and there’s too little time to do the necessary homework. The Game Plan going forward then is to just sit tight and listen. Cramer on Friday discussed the most important earnings releases of the coming week and what investors should look for. Here they are:
Among the banks, JPMorgan Chase [JPM 45.98
Also, one of Cramer’s favorite regional banks, First Horizon National [FHN 15.02
In tech, Intel [INTC 22.55
Yum! Brands [YUM 40.70
The rails are always some of the best barometers of economic health – because of the products they carry – which is why Cramer’s watching CSX [CSX 52.96
PPG Industries [PPG 68.68
Lastly, there’s General Electric [GE 18.52
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
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