TWO former senior employees of UOB Kay Hian Private Limited (UOBKH) were charged on Wednesday for allegedly lying to the Monetary Authority of Singapore (MAS) in relation to reports on a then Catalist aspirant. Lan Kang Ming, 38, and Wee Toon Lee, 34, each face three charges of providing MAS with false information in October 2018 in relation to due diligence reports on an unidentified company applying to list on the Catalist board of the Singapore Exchange. MAS said in a media statement on Wednesday that it was performing an onsite inspection of UOBKH between June and August 2018, to assess the latter's controls, policies and procedures in relation to its role as an issue manager for Initial Public Offering (IPOs). During the examination, Lan and Wee were said to have provided different versions of a due diligence report relating to background checks on a company applying to be listed on the Catalist board of the Singapore Exchange. UOBKH had acted as the issue manager
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By MICHELLE TAN
11 March 2011
With last year’s trading euphoria quickly dissipating amid a fragile investing backdrop, it is no wonder investors are jittery, a mood that has triggered a broad sell-down in equities. So far the Straits Times Index (STI) has lost more than 3 per cent year-to-date.
From a short-term technical standpoint, we are currently on shaky ground. Admittedly, based on past market price activity and chart patterns, technical analysts are currently expecting a reversal pattern any time now that could bring the STI under the 3,000 mark.
But from a longer-term fundamental point of view, is this really the time to sell and hoard cash in bank accounts that pay minuscule interest rates, or should investors plant money into recently shunned equities?
But first a quick look at last quarter’s results and how they have played on the overall health of the local equities landscape.
Singapore-listed companies generally posted fairly good numbers in Q4. The key sector that outshone the rest was offshore and marine (O&M) due to fatter margins from bigger projects, while sectors that missed out on the upside comprised mainly property developers, exchanges and shipping.
Real estate investment trusts (Reits), which garnered a fair bit of attention last year due to heightened interest in yield plays, did not disappoint in Q4, though worries over rental reversions and increased risks in ventures out of Singapore continue to colour the sector in general.
Banks fared within general consensus, though they did not really surprise much on the upside. They continued to face margin pressure and cost pressures, though these negativities were offset by greater fee income and strong trading gains (of which the latter is not typically characteristic of the last quarter of the year).
On the other hand, margin pressure was slightly alleviated within the telecommunications sector, which enjoyed strong mobile revenue growth and greater data revenue on the back of growing smartphone penetration rates.
All in all, the real situation does not look as bad as recent sell-downs suggest. Looking ahead, the markets can be expected to spend this quarter ‘nursing their wounds’. The US Federal Reserve’s latest round of quantitative easing measures is likely to cause commodity prices to rise and accentuate income gaps. All of which could fuel commodity hoarding and create an array of social issues. And the Middle East and North Africa crisis poses a major key risk - oil.
Crude oil prices, which have taken on a life of their own, could produce a plethora of negative spillover effects. For one thing, higher energy prices will almost inevitably trigger a spike in inflation expectations around the globe. In developed economies, deflation may be the net impact while in emerging markets, inflation might soar, forcing the hands of local governments to further tighten monetary policies.
That said, Asia seems better equipped to deal with inflationary pressures. After all, it beats being in debt and facing slow to no growth. Companies would typically find a way to pass costs to consumers as long as consumer demand in Asia remains stable. In fact, inflationary environments tend to spur corporate earnings and bolster banks, prompting analysts’ upgrades. All of which is good for equity prices.
In fact, the second half of 2011 would perhaps be an interesting time to look out for as equity valuation multiples can be expected to spiral upwards in Singapore and the rest of Asia.
Key sectors that may prove good for our ‘pockets’ include banks, O&M and plantations. Index-wise, the STI can be expected to play ‘catch-up’ in the latter half of the year as we feel valuations are still conservative and markets could pick up when interest in Asia regains traction.
So the best way to approach the market? Take a backseat for a while and observe. Diligence in picking stocks with sound fundamentals and patience could perhaps be key to capital upside in the year to come.