Joey was interviewed on 938 Live after the trading session ended on Friday, 19 August 2016. It was a pretty lackluster week with not much trading action on our shores. However, oil prices has rallied strongly over the past 3 weeks. Is our Singapore Oil and Gas sector recovering from this as well?
Do check out his quick views on the sector to get an idea on the levels to watch and what stocks to look out for in the coming week.
The full transcript of the interview can be seen below too.
Joey how did the market fared today?
Singapore market opened up 12 points today taking the cue from Wall Street with DOW Jones closing up 24 points. This was mainly due oil prices climbing to an 8 week high after hopes of a production cut among the major producers.
We did see some strength in oil and gas counters in the morning due to this, however most of them pulled back from their day highs in the afternoon.
So STI was pretty flat throughout the day with occasional profit taking and finally we have STI closing up just 7 points for the day at 2844.
How is the Singapore Oil and Gas sector holding up?
Well, we have seen Brent Crude Oil prices rallying from US$42 to above US$50 a barrel over the past 3 weeks. Usually, there would be some correlation between crude oil price and the prices of oil and gas stocks in Singapore.
We did see a slight technical rebound for some of these counters recently, however, most of them faced selling pressure after the rebound and had retraced back down since. Stocks like Sembcorp Marine, Ezra and Ezion are currently supported just above their recent lows.
I think the market is still harping on factors like the debt levels and earnings visibility of some of these companies in the sector, especially after the Swiber saga. This continues to be a drag on sentiment in the oil and gas sector.
We even saw bank stocks taking a hit due to loan exposure to these companies which actually weakened the STI as well.
On the whole, STI has been supported above the 2820 level for about 3 weeks where we saw some bargain hunting taking place. Baring any negative news flow, we can expect some buying to occur back there again with a near term cap at 2900 for now.
We love to get an idea of some of the stocks investors should look out for in the coming week, what would you say?
One can consider Mapletree GCC Trust for a potential upside. It has recently release its earnings results where we saw 1QFY17 revenue of S$85m and Net property income of S$69.4m, up 12% and 11% yoy which was above expectations.
Fundamentally, it has good income visibility and its current gearing at 40% can allow it to make new acquisitions in future.
Technically, we have also seen it break above the previous high at 1.10 formed last year with it poised to head higher above 1.10 now and uptrend continuing. It has closed at 1.115 today.