SINGAPORE (Dec 7): UOB Kay Hian is upgrading its view on Singapore’s shipyard sector to “market weight” following the latest deal announced by Organization of the Petroleum Exporting Countries (OPEC), which raises oil prices and lifts hope of a rebound in 2017.
However, the research house expects oil companies to only raise capex in 2018 at the earliest. In the near-term, a gradual rather than sudden recovery is expected for contract awards.
“Production orders take centre stage, but these orders were roughly a quarter of total orders Singapore shipyards had secured in the last cycle,” observe analysts Foo Zhi Wei and Andrew Chow in a Wednesday report.
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