Sunday, August 16, 2015

Noble tumbles ahead of meeting with investors: Will it say enough?

AUG 17, 20159:39 AM

NOBLE Group shares traded lower on Monday ahead of the management's meeting with investors later in the afternoon.

Noble was trading around S$0.46 a share, down 3 Singapore cents, or 6 per cent at 09:29am. More than 12 million shares changed hands.

At 2pm on Monday, the Hong Kong-based commodities group will present an explanation of how its business works, its interim results and the findings of the PricewaterhouseCoopers (PwC) Assurance Opinion, with a full and open Q&A session at the Ritz Carlton Hotel in Singapore.

The Business Times understands that Noble is holding a separate meeting with sell side analysts this morning.

"The key question today is whether Noble will provide additional information beyond what was said during its 2Q15 results call last week including the proportion of profits booked up front from off take agreements...Clearly what was provided thus far has not been sufficient, with the stock price down 16% over the past week,'' said Mervin Song, an analyst with DBS Group Research.

Mr Song noted, "Noble's previous stance that it will not provide detailed information on specific transactions or deals due to competitive and confidentially reasons which is understandable, there is a possibility that today's event will not scare away the short sellers or satisfy Noble's critics.''

"Thus, the next catalyst will be an update from Noble on the approaches it has received,'' he said.

Last week, Noble reported a 5 per cent drop in net profit for the second quarter ended June 30 to US$62.61 million, dragged by commodity pricing pressures. Revenue for the quarter saw a 22 per cent slump to US$18.36 billion.

The associate value of Yancoal, recognised as an associate on its balance sheet, has declined from US$825 million upon closing of the merger in 2012 to US$306 million as at June 30 due to the losses incurred by Yancoal and impairments. Noble had acquired its 13.2 per cent stake in Yancoal via a sale of 100 per cent of its shares in Gloucester Coal into Yancoal Australia.

While PwC said that the commodities trader adhered to international requirements and standard industry practices when valuing contracts, that provided little relief to the market which felt the mandate was narrow as the issue of whether valuations were reasonable or misleading were not addressed.

Oil prices pulled down by shrinking Japanese economy

AUG 17, 20158:42 AM

[SINGAPORE] Oil prices fell in early Asian trading on Monday as Japan's economy contracted on the back of falling exports and consumer spending, adding to fears that Asia's biggest economies are starting to slow at the same time.

US crude was trading at US$42.07 per barrel at 0012 GMT, 43 cents below their last settlement and close to more than six-year lows. Brent futures were at US$48.69 a barrel, down 50 cents but still some way off from their 2015-low of US$45.19.

Japan's economy, the second biggest in Asia and number three in the world, shrank at an annualised pace of 1.6 per cent in April-June as exports slumped and consumers cut back on spending.

The slowdown in Asia's biggest economy, China, and its impact on the region have also heightened the chance that any rebound in growth in July-September will be modest, analysts say.

The weak economic data comes at a time when production around the world remains at or near record highs. "Opec is expected to boost crude oil production to 33 million barrels day, the most ever, after international sanctions are removed against Iran. Oman, the biggest non-Opec oil producer in the Middle East, has also increased its production. Oman pumped one million barrels per day in July, a 0.5 per cent increase from June's daily output level," ANZ bank said on Monday.

Production in Russia and the United States also remains near records.

REUTERS

Singapore shares open lower on Monday after poor NODX showing

Lee Meixianleemx@sph.com.sg@LeeMeixianBT

AUG 17, 20159:30 AM

SINGAPORE share prices opened lower on Monday with the Straits Times Index down 3.71 points to 3,110.54 at 9.08am, following an International Enterprise Singapore report showing a slide in non-electronics shipments dragging down overall non-oil domestic exports in July.

The lower Singapore market opening was despite Japanese stocks rising after a report showed the nation's economy contracting last quarter by less than economists had forecast. According to Bloomberg, The Topix index added 0.7 per cent to 1,676.71 as at 9.33am in Tokyo.

On Friday, Wall Street stocks had steadied on solid US data after stumbling earlier in the week after China unexpectedly devalued its currency. All three indices ended with gains for the week, with the Dow Jones Industrial Average adding 104.02 points (0.60 per cent) to 17,477.40. The broad-based S&P 500 rose 13.97 (0.67 per cent) to 2,091.54, while the tech-rich Nasdaq Composite Index increased 4.70 (0.09 per cent) to 5,048.24.

Singapore Exchange's biggest losers in early trading on Monday included UOB at S$20.39 (down 19 cents or 0.9 per cent), SingTel at S$4.08 (down 14 cents or 3.3 per cent), as well as Jardine stocks - Jardine Matheson, Jardine Strategic and Jardine C&C - all down by 0.4-0.6 per cent. Noble Group, among the most active, was down 1.5 cent or 3.1 per cent to S$0.475 .

Some 106.3 million shares worth S$61.5 million changed hands, with losers outnumbering gainers 84-55.

Japan economy's Q2 contraction a blow for 'Abenomics'

AUG 17, 20159:19 AM

[TOKYO] Japan's economy contracted 0.4 per cent in the April-June quarter, official data showed Monday, underscoring how Tokyo's "Abenomics" growth programme has yet to grain traction.

Weak domestic consumption and slow exports weighed on the world's third largest economy, which shrank an annualised 1.6 per cent, after posting growth in the previous two quarters, according to the Cabinet Office.

Still, the data came in slightly better than the market's expectations for a fall of 0.5 per cent, or a 1.8 per cent annualised drop.

Private consumption, which accounts for about 60 per cent of Japan's GDP, fell 0.8 per cent, as exports dropped 4.4 per cent.

"The sharp plunge from the previous quarter's surprise growth was partly due to disappointing demand for Japanese products in the US, Chinese and other resource-exporting markets," SMBC Nikko Securities said in a commentary.

"Sluggish wage growth and bad weather drove down consumption at home," it added.

The downturn follows a stronger-than-expected expansion in the first quarter driven by a pickup in capital spending, but as more tepid second-quarter data rolled in some economists warned that the recovery would be short-lived.

An inventory buildup at Japanese firms was taking a toll on industrial production, analysts had warned.

Japan's revised 1.1 per cent expansion in January-March was sharply up from an initial estimate of 0.6 per cent growth.

The upbeat data had offered some good news for Prime Minister Shinzo Abe's more than two-year-old policy blitz, dubbed Abenomics, aimed at kickstarting anaemic growth and conquering years of deflation.

The programme called for big government spending, massive central bank monetary easing and reforms to a highly regulated economy. The pace of reforms, particularly shaking up a protected agricultural sector, has lagged, however.

Household spending has struggled to recover following a sales tax rise last year, as the Bank of Japan struggles to push up prices, partly weighed by tumbling oil prices.

CHINA CONCERN

The drop has forced BoJ chief Haruhiko Kuroda to push back a timeline for hitting a 2.0 per cent inflation target - a cornerstone of Abenomics - although he insists that healthy price rises are around the corner.

Earlier this month, Kuroda said he would consider expanding the bank's record 80 trillion yen (S$901 billion) annual asset-buying scheme - similar to the US Federal Reserve's quantitative easing - if weak oil prices keep holding back near-zero inflation.

In July, Japan's central bank cut its annual growth and inflation forecasts for the fiscal year to March 2016, but held off further monetary easing that many analysts expect will come later this year.

The BoJ now expects Japan's economy to expand 1.7 per cent in the fiscal year while inflation would come in at 0.7 per cent.

That was down from an earlier estimate of 2.0 per cent and 0.8 per cent, respectively.

Despite wage rises at some big firms and a tight labour market, convincing people to splash out on consumer goods has been a struggle after last year's levy rise, aimed at helping pay down a massive national debt.

The higher taxes hammered consumer spending and pushed the economy into a brief recession. Japan limped out of the red in the last three months of 2014.

Despite a recovery in the US, the slowdown in China, a major market for Japanese exporters, has raised a red flag.

Following a month-long rout on Chinese stock markets, authorities devalued the yuan several times last week, roiling global equity markets and sparking fears of a currency war in which countries compete to boost exports by cutting the value of their currency.

AFP

Japan's Q2 GDP shrinks annualised 1.6%, first slump since recession in 2014

AUG 17, 20158:01 AM

[TOKYO] Japan's economy shrank at an annualised pace of 1.6 per cent in the April-June period, contracting for the first time in three quarters on weak exports and consumer spending, government data showed on Monday.

The preliminary reading for gross domestic product compared with the median estimate of a 1.9 per cent contraction in a Reuters poll of economists. It followed a revised 4.5 per cent expansion in the first quarter.

On a quarter-on-quarter basis, GDP contracted 0.4 per cent in April-June, versus a 0.5 per cent contraction expected by economists.

REUTERS

Sunday, August 16, 2015