Friday 28th November 2014
NEWS TICKER: THURSDAY, NOVEMBER 27TH 2014: The Straits Times Index (STI) ended -8.70 points lower or -0.26% to 3340.96, taking the year-to-date performance to +5.56%. The FTSE ST Mid Cap Index declined -0.11% while the FTSE ST Small Cap Index declined -0.43%. The top active stocks were SingTel (-0.26%), DBS (-0.25%), ThaiBev (-4.38%), Suntec REIT (+0.26%) and OCBC Bank (+0.10%). The outperforming sectors today were represented by the FTSE ST Health Care Index (+0.47%). The two biggest stocks of the FTSE ST Health Care Index are Raffles Medical Group (-0.52%) and Biosensors International Group (+2.75%). The underperforming sector was the FTSE ST Basic Materials Index, which declined -2.14% with Midas Holdings ’ share price declining -5.09% and Geo Energy Resources’ share price gaining +2.33%. The three most active Exchange Traded Funds (ETFs) by value today were the IS MSCI India (+0.26%), United SSE 50 China ETF (-0.57%), STI ETF (+0.59%). The three most active Real Estate Investment Trusts (REITs) by value were Suntec REIT (+0.26%), Ascendas REIT (-0.86%), CapitaCom Trust (-0.89%). The most active index warrants by value today were HSI24400MBeCW141230 (-15.73%), HSI23800MBePW150129 (+6.45%), HSI23600MBePW141230 (+11.11%). The most active stock warrants by value today were DBS MB eCW150602 (+3.33%), UOB MB eCW150415 (+5.23%), UOB MB eCW150102 (+2.38%) - Moody's has withdrawn the rating of Rossiyskiy Kredit Bank's Caa3 long-term local- and foreign-currency deposit ratings, the Not Prime short-term deposit ratings and the E standalone bank financial strength rating (BFSR), equivalent to a caa3 baseline credit assessment. The ratings agency says the rating has been withdrawn for its own business reasons At the time of the withdrawal, the outlook on the bank's long-term ratings was negative while the standalone E BFSR carried a stable outlook - Malaysian builder MMC Corp Bhd said earlier today that it will list its power unit Malakoff Bhd (IPO-MALB.KL) in a deal bankers expect to raise more than $1bn dollars. The IPO, for up to 30.4% of Malakoff's capital, was deferred earlier this year and approval from the Securities Commission lapsed as a result. MMC, controlled by reclusive Malaysian tycoon Syed Mokhtar Al-Bukhary, will resubmit the application within one month and expects the deal to be completed by second quarter of 2015, according to a local stock exchange filing – According to local press report the newly minted Somalia Stock Exchange expects seven companies in the telecoms, financial services and transport sectors to list when it is set up in 2015. Somalia's economy is slowly recovering from more than two decades of conflict, although the government is still battling an Islamist insurgency. Amid the chaos, some businesses have thrived, including money transfer and mobile phone firms. The Somalia Stock Exchange has opened administrative offices in Mogadishu and other Somali centres like Kismayu, as well as in Nairobi, to help recruitment and in other related issues - Moody's has upgraded to Baa1 from Baa2 the long-term deposit ratings of China CITIC Bank International Limited, and affirmed the bank's P-2 short-term deposit ratings. The bank's senior unsecured MTN program rating and deposit note/CD program ratings are also upgraded to (P)Baa1/Baa1 from (P)Baa2/Baa2, while the short-term deposit note/CD program ratings are affirmed at (P)P-2. The bank's baseline credit assessment (BCA) is unchanged at baa3. The outlook on all the ratings is stable. The rating action concludes Moody's review for upgrade for China CITIC Bank International, which was initiated on September 2nd this year, after the senior unsecured bond rating of its ultimate parents CITIC Group Corporation and CITIC Limited (formerly CITIC Pacific Limited) were upgraded to A3 from Baa2. CITIC Group Corporation, wholly owned by China's Ministry of Finance, owns 78% of CITIC Limited, which in turn owns 67% of China CITIC Bank.

Barings backs resources sector equities over commodities

Tuesday, 05 August 2014
Barings backs resources sector equities over commodities Resources sector equities are currently more attractive than direct investments in physical commodities and investors should focus on investing in ‘companies not commodities’ to benefit from an increasing global demand for resources, according to Baring Asset Management (Barings). http://www.ftseglobalmarkets.com/

Resources sector equities are currently more attractive than direct investments in physical commodities and investors should focus on investing in ‘companies not commodities’ to benefit from an increasing global demand for resources, according to Baring Asset Management (Barings).

The opportunity in resources equities is as strong as it has been for several years, believes Barings.  Its positive outlook is based on the size of differential between what it sees as positive company specific drivers versus a negative – often macro driven – consensus view. 

The firm has been investing in resource-related equities for nearly 20 years and manages more than $900m in a range of different strategies in the asset class. 



 “After several years of a benign-to-negative commodity pricing backdrop and associated de-rating by shareholders, companies are finally taking action to improve margins and returns driven by self-help and or restructuring,” says Duncan Goodwin, head of Global Resources at Barings.

“To capture this market shift, we are putting more emphasis on the bottom-up element of stock selection and increasing the level of stock conviction in the Baring Global Resources Fund.  That means a reduced emphasis on top-down portfolio construction with more risk taken at the stock level and reduced macro factor risk. 

“We are increasing the level of stock conviction by decreasing the number of investments held in our portfolio. With the right analysis, we believe it is possible to target investment opportunities offering superior returns and better prospects for positive earnings surprises.”

Since March this year, the Baring Global Resources Fund has been tracked against a new composite benchmark, represented by a 60% weighting to the MSCI AC World Energy Index and a 40% weighting to the MSCI AC Materials Index. 

The benchmark broadens the investable universe of stocks in the Materials space beyond solely Metals and Mining to include subsectors such as chemicals, construction materials, containers and packaging and paper and forest products.

In addition to oil and gas production, the processing, marketing, storing and transporting of hydrocarbons is becoming an increasingly important factor for investors as countries and regions look to secure a stable and competitive source of energy to sustain economic growth.

Barings believes valuations for resources companies are currently trading below historical levels and look set to revert to their long term mean – making them very attractive for active investors with a strong understanding of the sector.  On a longer term basis, continued population growth will drive absolute demand for natural resources, energy production and raw materials, which, in turn, will create growth opportunities for resources companies throughout the value chain.

Goodwin adds: “Over the very long term, we are adamant that resource equities retain a valuable role in investment portfolios.  As commodity prices are closely correlated with rises in consumer prices, investment in the resources sector has the potential to act as a hedge against inflation.  We believe the opportunities in the sector are as strong as they have been for several years and expect a positive re-rating of the sector and associated gains for our resources fund irrespective of the macro.”

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