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Stocks;Weakearnings,Greekbailoutinthespotlight
24thFeb2012
TheBusinessTimes
ByRSivanithySeniorCorrespondent
2012SingaporePressHoldingsLimited
EARNINGSdisappointmentsandaclassic'buyinanticipation,sellonnews'playwasthe
twomainfeaturesofthepastweek.
Prominent market favourites such as Wilmar International,
Genting Singapore and
NeptuneOrientLines(NOL)wereamongthosewhosesharestookabeatingaftertheir
results were announced, while over in Europe, confirmation of
Greece's widely
anticipatedsecondbailoutbroughtthesellersout.
TheoutcomewasthatalthoughtheStraitsTimesIndex(STI)managedabounceof9.78
pointsyesterday,itrecordedanettlossof22pointsfortheweek,itsfirstweeklylossin
2012.Butitisstill332pointsor12.5percentupfortheyear.
The impetus to buy earlier this year came because of
anticipation that European
officialswouldfinallystitchtogetheraworkableplantosaveGreece,theeuroandthe
EuropeanUnion.
Monday's announcement that a deal had been finalised resulted in
immediate
weaknessandthiswasaccompaniedbywidespreadreportsofscepticismoverwhether
theplanwouldwork.
Manyobserversnowbelievethatheapingmoreausteritymeasuresonanationthatis
already on its knees will only make matters worse and not
better; the country's
manufacturingsectorhasbeenhollowedoutandtourism,whichcomprises15percent
ofGDP,isstrugglingtoremaincompetitivewithotherdestinationsintheregion.
Moreover,Greeceisconsideredtheleastcompetitivenationintheeurozoneandhas
thelowestlevelsoftaxrevenuestoGDPintheeurozone.
WhetherornotalltheauthoritieshavedoneiskicktheGreekdebtcanfurtherdown
theroad,thepressureonItalyandSpain-twoEuropeangiantswhowerenextinlineto
be hit by debt worries - has been eased and worries of a
disorderly default have
receded.Replacingthem,however,atleastasfarasthelocalmarketisconcerned,are
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earningsconcerns.
PlantationsgiantWilmar'ssharestookabeatingonWednesdayandThursdayafterthe
companyreporteditsearnings.
Accompaniedbyaslewof'sell'callsfromanalysts-especiallysincethestockpricehad
risensharplyinanticipationofgoodresults-Wilmarfell78centsor13.2percentover
theweektoendat$5.12.ItweakenedforthreeconsecutivedaysfromWednesday.
PerhapsthebiggestdisappointmentcamefromNOL,whichshockedthemarketwitha
US$478millionfull-yearlosscomparedtoaprofitofUS$461millionayearearlier.
Asaresult,theshippingfirmunveiledaUS$500millioncost-cuttingprogrammethat
probablyhelpedeasesomeofthesellingpressureitsstockencountered.
NOLdropped10.5centsor7.3percentto$1.34.Almostallhousescalleda'sell'onthe
stock, one notable exception beingMorgan Stanley -which said NOL
couldmake a
profitin2012andthatupgradescouldemergelaterthisyear.
Initsdailyreportyesterday,researchfirmIdeaglobaldescribedglobalmarketsasbeing
inastateofflux.'OptimistslookattheGreekorderlyrestructuringandfeelthatthetail
risks (Greek euro exit or major contagion) have been reduced for
this year,' said
Ideaglobal.
'Thebearsfeelthatpriceactionhasrunaheadofthefundamentalsandthatoilprices
andChinaareissuesaswellastheeurozone.Incomingdataandeventsareonlyleading
to the bulls or bearsbecomingmore convinced, and this is
producing choppy price
action.'
Source:TheBusinessTimes
