THE STRAITS TIMES Index rallied in the week before the festive Chinese New Year period. It broke through four consecutive weeks of decline to finish 60 points, or 2.2% higher, last Thursday at 2,753.63 points after the European Union said it would help Greece manage its massive debt and China’s government announced consumer prices rose 1.5% in January, lower than the 1.9% rise in December.

 

China has been taking steps to cool an economy that expanded 10.7% in the fourth quarter, the fastest pace in two years. The central bank ordered lenders to set aside larger reserves on Jan 12. Although the urgency for immediate interest-rate increases has receded as consumer prices look stable, analysts say the concern over fiscal tightening still exists.

 

Meanwhile, the STI performance was in line with DBS’s temporary trading-range estimate for the index at 2,700 to 2,770 in the near term before the downtrend resumes. Last Thursday, Neptune Orient Lines announced larger-than-expected FY2009 losses of US$741 million ($1 billion) on the back of a 30% drop in revenue to US$6.52 billion. CEO Ron Widdows continues to anticipate downward pressure on freight rates, owing to the oversupply of tonnage. NOL has 10 vessels laid up and is implementing slow-steaming on its Asia-Europe and Transpacific routes to absorb additional capacity and save on bunker costs.

 

Demand began to tick upwards in 4Q2009, however, with container shipping volumes in the Transpacific and Latin American routes seeing growth of 32% y-o-y, and routes across Asia and the Middle East growing 40%. While Widdows cautions that this was based on the restocking of inventories rather than a fundamental change in demand, he says freight rates have stabilised and trended upwards on some routes.

 

Public transport operator ComfortDelGro registered a 2.2% y-o-y drop in revenue to $3.05 billion in the year to Dec 31, 2009 and a 9.7% rise in net profit to $219.5 million in the same period. During the year, Northeast Line rail ridership rose 5.9% to 370,000. In contrast, bus ridership fell 1.3%. DMG & Partners believes the overlapping of intertown bus service routes with MRT lines will continue to draw more bus commuters towards rail. “We expect the cannibalisation process to continue, with rail ridership growing a stronger 10% in 2010, underpinned by tourism growth. In contrast, we expect bus ridership to decline 2%,” it says.

 

Meanwhile, the Singapore Exchange said it would grant companies on its Watch-List, including ASA Group Holdings, Chuan Soon Huat, Fastech Synergy and RH Petrogas, a one-year extension to improve their finan cial performance and meet the requirements, to avoid being delisted. The companies must report a pre-tax profit for the last completed FY or have a market capitalisation of at least $40 million.

 

Colliers International reported that local Grade-A office rents fell the most among Asia-Pacific markets tracked in 2009. Local rents slid 46.2% y-o-y in 4Q2009, while rents in Hong Kong and Tokyo fell 24.2% and 19.5%, respectively.

 

A slew of economic data is due for release when the market reopens on Feb 17, including electronics export data for January, non-oil domestic export data and 4Q2009 GDP figures. ST Engineering and Oversea-Chinese Banking Corp are scheduled to announce FY2009 results.