Dec job losses trimmed to the lowest since Mar 08 with private payroll losses of 84,000 slightly more than market expectations but was a sharp drop on a m-o-m basis; US service sectors rebounded according to the ISM non-manufacturing index but rebound was below market expectations. Despite crude inventories built up over last week, oil managed to rise for a 10th straight session backed by a weaker dollar and cold weather. Topsy turvy session overnight with markets undecided by mixed signals from macro data. Dow +0.02%, S&P +0.05% and Nasdaq -0.33% as indices held firm on closing.

Believe laggard second liners should be prime beneficiaries should Capricorn effect persist. Other than S-chips, shipping and commodities proxies, also agree with a good friend of mine that Singapore office proxies as a laggard sector should continue to benefit despite already having a good run; while others eg United Engineers trading at more than 40% discount to book should re-rate when valuation gap narrows.

Picked up an interesting sector report on Singapore banks. Positive stance on Singapore banks based on view on a) a rebound in loans growth with i) Turnaround of mortgage loans growth, in tandem with a rebound in private home sales ii) GDP growth to have a positive impact on corporate and SME loan portfolio b) as previously articulated a steepening yield curve to have an positive impact on NIM expansion c) possibly increase in non-interest income. DBS was picked as a key pick on valuation grounds (believe on a P/B basis). However with lower ROE and less prospects of regional growth especially compared to that of OCBC, personally believe DBS should always trade a discount to its Singapore peers.

Look forward to discussion as always, and as usual best of luck with the markets

Topsy turvy markets overnight, Dow -0.11%, S&P +0.31% and Nasdaq +0.01%. Interesting piece of news that Buffett has turned activist investor, publicly criticising Kraft for attempting to sell new stock (at a lower price than its previous stock buyback, thus potentially destroying value) to fund its targeted acquisition of Cadbury. Japan futures and Australia shares this morning indicate the positive data point for US factory orders may still linger. While stock markets may still bask in low interest rates with Capricorn signs written over, Mark Mobius in a report raised concerns of capital raisings derailing a possible stock market rally in 2010. Reckon he does have a point, given rich stock market valuations should attract capital raisings and potential IPOs. When the trend of sizable IPOs persist, large amounts of liquidity would be sucked away from the markets putting a dampener to stock prices. Ie, for short term traders would personally advocate to keep a look out for such announcements which would affect stock prices negatively intraday.

Picked up a piece of report on CMA which personally would tend to agree (see attached report). Despite CMA as probably one of the best retail proxy in Asia, the report’s main pitch on a switch from CMA to its constituent retail exposure in CMT and CRCT is probably warranted given the valuation gap on a P/B basis (CMA at 1.9x, versus CMT and CRCT at 1.2x). While it could be argued CMA could benefit from yield compression of retail cap rates from current 7-8% range to justified its premium to book value of 1.9x P/B, from a real estate perspective CMT and CRCT seem to look more attractive. CRCT’s FY10 yield of 6.5% probably backs the view of yield compression for China’s retail assets, but upside also seems limited assuming absence of acquisitions driven growth. Although CMT has enjoyed a good run recently, its FY10 yield of 5.4% does seems to suggest more upside possible from a yield compression angle, on top of quality assets and track record of double digit DPU growth.

Look forward to discussion as always, and best of luck with the markets

Looks like markets continue to bet on China as the main engine driving global economic growth. China manufacturing continues to expand in an accelerated pace as proxied by the the China PMI which indicated growth of more than 10% in Dec. In line with China, US manufacturing also expanded in Dec 09 at the fastest pace in 3 years as proxied by the ISM index. Stocks and oil gained while dollar weakened; Dow +1.5%, S&P +1.6% and Nasdaq +1.73% overnight. Bulls should continue to cheer today as we start the new year in January; on valuation grounds perhaps its time for second liners to play catch up, and S-chips to continue and gain traction?

While the Orient Express runs full steam possibly raising concerns of inflation as per above, also picked up an interesting article on the fixed income front with Pimco underweight on treasuries as well as TIPs. Although this may indicate concerns on rising yield spreads on increasing government debt, it is also interesting to note that an underweight on TIPs suggest at this stage implies inflation is slowing in the near term as the economies continues to seek firm ground.

Picked up a piece of report which should be of interest to most these days (see attached report). While the main pitch is on tighter junket rules possibly putting a dampener on gaming revenue, Genting’s share price continues to be firm on possible “euphoria” effect prior to opening. Trading c.16x EV/EBITDA at a premium to global peers, reckon it could be prudent to take profit slightly ahead of casino opening to reassess the viability of the Integrated Resort concept should earnings underperform market expectations on opening of casino.

Look forward to discussion as always, and best of luck with the markets