STOCKS NEWS SINGAPORE-Commodity shares outperform in strong market - Reuters UK STOCKS NEWS SINGAPORE-Commodity shares outperform in strong market - Reuters UK

Monday, June 18, 2012

STOCKS NEWS SINGAPORE-Commodity shares outperform in strong market - Reuters UK

STOCKS NEWS SINGAPORE-Commodity shares outperform in strong market - Reuters UK

Mon Jun 18, 2012 5:58am BST

Singapore shares rose for the second straight day, with commodity-related stocks figuring among the biggest gainers on renewed risk appetite after Greece's election delivered a slim parliamentary majority to pro-bailout parties.

The Straits Times Index was up 1.2 percent at 2,844.15 points, while MSCI's broadest index of Asia Pacific ex-Japan Japan advanced 2 percent.

Olam International Ltd gained 4 percent, while Golden Agri-Resources Ltd and Noble Group Ltd added more than 2 percent each.

Coal producer Sakari Resources Ltd surged as much as 7.1 percent on volume of 22 million shares, 1.7 times the average full-day volume traded over the past 30 days. Sakari was the second-highest traded stock by value.

"It's one of the stocks that had dropped a lot - one of the worst performers recently. So when the market rebounds, those commodity stocks that fell the most will rebound more," said a trader. As of Friday, Sakari's shares had lost more than half their value from the year's high of S$2.71 in late February.

1253 (0553 GMT)

(Reporting by Eveline Danubrata in Singapore;


11:02 STOCKS NEWS SINGAPORE-Maybank says hotel room glut looms

Maybank Kim Eng expects 14.2 million tourist arrivals in Singapore this year, up 8 percent from 2011, but hotel room supply is forecast to grow at a compound annual growth rate (CAGR) of 6.3 percent from 2011 to 2015, outstripping demand growth of 5.9 percent.

Overall, 11,441 new rooms from known projects will be added to the market between the second quarter of 2012 and 2015, Maybank said, adding that the additional supply of hotel rooms could dampen occupancy rates.

Property consultancy CBRE said in a report last week that Singapore hotel room rates were at a record high with revenue per available room (RevPAR) soaring.

In the first quarter of 2012, average daily rates of gazetted hotels grew 11.4 percent to S$259 ($200) from a year earlier and RevPAR increased 14.7 percent year-on-year to S$224, CBRE said.

Maybank expects Singapore hotels to register a CAGR of 3.2 percent for average room rate over 2011-2015 fiscal years. This is likely to cap the share price of CDL Hospitality Trusts , which derived most of its revenue from the city-state, the broker said.

Maybank maintained its hold rating and S$1.94 target price on CDL. CDL shares were up 1.1 percent at S$1.915 on Monday. The stock has risen 24 percent this year, outperforming the 12.5 percent gain in the FT ST Midcap Index.

For a related story, click

1056 (0256 GMT)

(Reporting by Eveline Danubrata in Singapore; ($1 = 1.2723 Singapore dollars)

Stocks at one-month high; eyes on Greece -

Stocks recorded their third big gain of the week and closed at a one-month high on Friday because of expectations that the central banks of countries around the world will step in to limit the damage from a debt crisis in Europe.

The Dow Jones Industrial Average climbed 115 points.

Now investors wait for a crucial election on Sunday in Greece that will help determine whether that country stops using the euro as its currency. Such an exit would destabilise financial markets.

Mario Draghi, president of the European Central Bank, said his institution stood ready to support Europe's banking system by continuing to lend money to solvent banks. He also appeared to leave open the possibility of an interest rate cut.

Draghi said in Frankfurt that the ECB has a "crucial role" in extending credit to banks in times of instability, when banks can't always borrow money on financial markets.

On Thursday, Reuters reported the ECB, the US Federal Reserve, the Bank of England and other global financial authorities were ready to act in concert to limit the fallout from Greece.

Investors also are more confident about the election itself, said Peter Tuz, a money manager, at Chase Investment Counsel, which runs mutual funds.

"There's a growing sense of optimism," he said. "The betting now is that the 'let's stay in the euro' segment of the population will win."

Borrowing costs for Spain were unchanged. They fell slightly for Italy, an indication that investors are feeling a little better about that country's solvency. They have been worried that Italy will have to seek financial rescue.

The Dow rose 115.26 points to close at 12,767.17, its highest finish since May 11. The Standard & Poor's 500 index climbed 13.74 points to 1,342.84, also its highest since May 11. The Nasdaq composite index rose 36.47 points to 2,872.80.

For the week, the Dow rose 0.9 per cent, the S&P one per cent and the Nasdaq 1.3 per cent.

The week included four moves of 100 points or more for the Dow, the first time that has happened since April:

- On Monday, the Dow lost 142 points as enthusiasm faded for a $US125 billion ($A125.2 billion) rescue of Spanish banks.

- On Tuesday, the Dow climbed 162 after a Federal Reserve official said he supported more measures to stimulate the economy.

- On Thursday, the Dow gained 155, primarily because of late reports about possible coordinated action by central banks.

Energy stocks rose the most Friday. OPEC oil ministers agreed Thursday to keep their production target steady, a compromise meant in part to soothe economically troubled countries.

A pair of weak economic reports helped push Treasury prices up and yields down.

A report on US factory production showed a drop in manufacturing, a key driver of economic growth. A gauge of manufacturing in New York sank to its lowest level since November.

The yield on the 10-year Treasury note fell to 1.60 per cent from 1.64 per cent Thursday. Traders have been shifting money into the safety of the Treasury market ahead of the Greek election. That higher demand has kept yields near all-time lows.

Among stocks making big moves:

- Microsoft rose 68 cents, or 2.3 per cent, to $US30.02 following reports that the company is in talks to buy Yammer, a developer of social networks within companies.

- Capital One Financial rose 80 cents, or 1.5 per cent, to $US53.81 after the company said uncollectable and delinquent loans at its credit card business dropped last month.

- Defence contractor AAR plunged $US1.23, or 10.6 per cent, to $US10.34. The company updated its forecast for fourth-quarter and fiscal-year earnings, and they were weaker than Wall Street expected.

- YPF, Argentina's state-controlled oil and gas producer, rose 72 cents, or 6.9 per cent, to $US11.17 after Mexican telecommunications billionaire Carlos Slim said he had acquired an 8.4 per cent stake in the company.

China money rates slump on flagging loan demand; IRS firm - Reuters UK

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Small Talk: Whitehall needs to put its money where its mouth ison helping small business - The Independent

That is what is supposed to have happened after the Government announced in November 2010 that its goal would be to award 25 per cent of all contracts to SMEs. It even announced some reforms to help it achieve that target – notably a streamlining of the pre-qualifying questionnaires that bidders for public sector work must complete before even registering an interest in a contract.

Sadly, however, the initiative isn't working. Just 7.8 per cent of government contracts went to SMEs during the third quarter of last year, with not a single government department coming anywhere near the 25 per cent target. At the Department for Business, which championed the goal, the proportion of contracts awarded to SMEs during the third quarter actually fell, to 13 per cent compared to 16.5 per cent in the previous quarter.

Moreover, the reality of the data may be much worse than the headline figures suggest. Colin Cram, a specialist in public sector procurement, has just revealed a string of embarrassing disclosures made to him by the Department of Business on its 25 per cent target. Not only does it acknowledge that the target is an aspiration rather than a hard and fast policy, the department reveals that the 25 per cent only applies to central government contracts. This work accounts for just £65bn of the entire £236bn public sector spend.

Worse of all, says Mr Cram, the figures just unveiled are not necessarily for contracts handed directly to SMEs. Departments are allowed to include contracts where SMEs feature somewhere in the supply chain. In fact, with that flexibility, it's quite an achievement to have kept the SME contract count so low.

The suspicion must be that some departments are paying only lip-service to what was never a particularly impressive commitment in the first place. Although some of the bureaucracy involved in bidding for public sector work has now been eased, there are other ways to help SMEs get more of these contracts. In Scotland, public bodies have been given guidance on how to design tender processes so as to give SMEs a better chance of winning.

At the very least, converting the 25 per cent target from aspiration into fully fledged policy would be an important signal of intent. Announcing that only direct contract awards count would be even better.

Camera experts in the picture

OMG, which specialises in mobile motion capture – recording movements digitally – has unveiled two new contracts in the past few days.

In a £2.27m deal with the Highways Agency, OMG's Yotta subsidiary will spend four years working to determine the condition of 140,000km of Britain's main roads.

That contract win followed a deal to supply The Imaginarum with 80 of its specialist cameras. It will also be working with the studio, founded by the actor Andy Serkis (Gollum in The Lord of the Rings, right), and the film producer Jonathan Cavendish (best known for the Bridget Jones films).

The deals could mark a turning point for IMG, which had a tough year in 2011, though it remained profitable. The stock now trades at 24p, a third more than a week ago, but still well off the 44p high of a year ago.

Telecoms punt for £2.5bn growth fund

Though it became fully operational last April, the Business Growth Fund has been taking its time to make investments. The fund is backed by Britain's five biggest banks but operates autonomously and has £2.5bn of capital with which to make investments of between £2m and £10m in fast-growing small and medium-sized businesses. In return, it gets a seat on the board plus an equity stake of at least 10 per cent.

Until this month, the fund had made only three investments. Now there is a fourth, with BGF announcing it is putting £10m into Lincoln-based GCI Telecom Group. Founder 12 years ago by Wayne Martin, who still runs the business, GCI's telecoms and data services are producing annual revenues of close to £70m.

BGF is taking a minority stake – the exact stake is undisclosed – and has also installed the telecom industry veteran John Cronin on the board of GCI as non-executive chairman.

Small businessman of the week: Price is now so important – which is good news for us

Matt Davies founded DirectFerries, a ticket retailer and independent travel provider

The downturn hasn't necessarily been bad news for everyone, particularly if you're a business exposed to the way in which people are now so much more determined to get the best possible price.

One thing we've found over the past two or three years is that everyone is after deals all the time – it used to be that people knew they would get cheaper tickets if they booked well in advance, but now they expect that all the time. Price is everything – if people are not getting the best price, they're not going, and they're waiting to the last minute to make that decision.

Our business has also been a beneficiary of the unpredictable weather and industrial action that has wreaked havoc on the airlines – the UK market was starting to get a little stagnant three years ago, but the ash cloud was a huge boost for us and that has kept on going.

Islamic finance: Notion of stewardship imbues business ethics - Financial Times

Since the start of the global economic crisis in 2008, financial education has been under increased scrutiny from those dissecting what went wrong. Who, after all, had trained the perpetrators of the crisis? Were the “masters of the universe” ever taught about ethics? And if not, why not?

Training in Islamic finance, which was already gaining in popularity pre-crisis, has grown from strength to strength, as it has developed a reputation as a haven of common sense and relative security in uncertain times.

At least two of the causes of the crisis – gharar (risk) and gambling – are banned by sharia (Islamic law).

“Several of the ethical lapses which occurred in the financial sector are prohibited in Islam,” says Omneya Abdelsalam, the director of the El Shaarani Research Centre for Islamic Business and Finance and the director of the MSc in Islamic Finance at Aston Business School. “[The crisis] highlighted the resilience of Islamic banks.”

She says that religious beliefs, not limited to Islam, can help leaders be more responsible in business.

“The belief in God, and that absolute ownership of everything is solely His, brings with it an acute level of responsibility and accountability based on the notion of stewardship, which is equally placed on each individual, given that all mankind is believed to be equal before God.

“Such beliefs have a direct and powerful impact on the way business is conducted.”

This “notion of stewardship” or khalifa, common to all Abrahamic faiths but particularly central to Islam, overlaps considerably with corporate social responsibility and transparency, two areas that have enjoyed a post-crisis boom.

Dr Abdelsalam says khalifa manifests itself in Islamic businesses “through fulfilling social responsibility of the business to the best of its capabilities, including fair treatment of employees, care for the environment and customers, and fulfilling the obligation towards shareholders and other stakeholders, through wise use of financial resources”.

At Aston, the Masters in Islamic finance encourages students to think about ethics in every module, be it accounting, contract law, or conventional finance modules.

Cedomir Nestorovic, a professor of Islamic business and management at the Singapore campus of Essec, a French business school, agrees that Islamic finance courses need to address these issues.

He says: “A course about Islamic finance should not be teaching financial techniques alone. There must be a part dealing with religious and ethical issues, explaining the rationale behind the industry.”

Prof Nestorovic adds that elements such as marketing and management must also become more integral parts of Islamic courses, so that they increase their breadth.

One criticism aimed at Islamic finance instruments and banks, or Islamic finance divisions within conventional banks, is they do not embrace the spirit of sharia, but try to find ways round it, in an emulation of conventional finance.

“There is a trend to consider Islamic finance as a ‘cosmetic’ industry where products and services are conventional ones with an Islamic veneer, the only purpose to obtain clearance from thesharia board,” says Prof Nestorovic.

The danger is that Islamic finance, in trying to become more popular, loses its firm roots in religion and ethics.

Some Islamic scholars, adds Prof Nestorovic, “consider that Islam finance does not exist because riba (interest, banned under sharia) is embedded in contracts, even if it is not labelled as such”.

“There is also a certain disagreement between Islamic countries about the definition of a tangible asset and some accounting principles.

“All in all, there is a gap between what is taught and realities for a certain number of observers,” says Prof Nestorovic.

Small business confidence in Wales lowest in the UK shows FSB research - WalesOnline

Confidence levels in the small business sector in Wales are the lowest of any nation or region in the UK, according to new research published today by the Federation of Small Businesses.

The FSB’s latest Voice of Small Business Index for Q2 of this year shows in Wales a net balance on business confidence of minus 12 points – representing a two point improvement on the position in Q1.

However, despite a narrowing of the gap between negative and positive outlook responses, Wales swaps places at the bottom of the leaguetable with Northern Ireland, which saw its negative balance improve markedly from minus 33 in Q1 to minus 6.

In terms of confidence the north-east of England have the most upbeat small firms, with a net positive balance of 16 having been minus nine in Q1.

In Scotland, although still in positive terrain, the positive outlook fell from plus nine to plus 4. In the south-west of England it was up 1 point to plus 10.

As well as Wales and Northern Ireland there were also negative balances in London, the Midlands and Yorkshire & Humberside, while for the north-west it was neutral.

Despite pressures, UK-wide confidence just remains in positive territory at plus 1.3, down 0.9 points on Q1.

The survey was conducted before George Osborne’s £100bn liquidity plans for the economy announced in his Mansion House address last Thursday.

The FSB wants his Funding for Lending Scheme to provide cash to those firms that need it, with a clear reporting process so that tangible evidence is given to show the money is being passed on to small firms and not just shoring up the banks.

Janet Jones, Welsh Policy Unit Chair for the Federation of Small Businesses, said: “Overall, the Small Business Index across the UK remains in positive territory, despite a slight decrease since Q1 and despite still only being mildly above zero.

“Although business confidence has not risen as sharply in Wales as in other parts of the UK – meaning we are reporting the worst business confidence – the slight increase does show signs of improvement whilst other parts of the UK have seen a marked drop.

“The index highlights serious constraints to growth, notably access to finance, with many small firms still finding it difficult to access credit which can result in them missing growth opportunities.

“Access to capital is an absolute necessity and the Welsh and UK Governments must give serious consideration to giving small businesses realistic alternatives to bank finance.

“A further issue is that with 63% of small firms saying that fuel is the main upwards driver of business costs, we urge the Chancellor to cancel the planned 3p rise in duty for August.”

The research found that than four in 10 (41%) small firms were refused finance from high street banks as confidence dipped in the second quarter.

However, despite the credit squeeze, more than 50% of respondents said they still plan to grow their businesses over the coming 12 months.

But the proportion of firms looking to grow rapidly shrank from 10.9% Q1 to 7.2 % in Q2.

With one in five firms saying access to finance is the main barrier to achieving growth aspirations, the FSB believes the credit squeeze will impair small businesses’ growth plans, reduce new job creation and further set back the UK’s struggle to emerge from recession.

Of 17 industry sectors measured, confidence fell in all but two. Confidence rose moderately in health and social work related firms, as well as vehicle sales and maintenance companies.

All other sectors reported a fall with financial and real estate services showing a dramatic decrease.

There were further sharp falls in retailing, leisure, sports and entertainment, as well as hotels and the restaurant and bar trade. A moderate decline in confidence was reported in manufacturing, IT and other business services.

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