China reported that January CPI rose 0.8 against projections for a 1% increase. PPI for January declined by 4.3% versus expectations of 3.8%. Immediately afterwards, commentary around disinflationary and deflationary fears hit the wires. Chinese stocks, however, celebrated by rallying with fresh expectations that we may see further stimulus by the central government. The FTSE China A50 Index added 1.5%. Oil saw action again overnight with both WTI and Brent sold off between 3 and 5%. WTI fell back towards the $50 level while Brent managed to hold above $55 a barrel. Looking at the charts, a successful test of the $45 level for WTI and $47 for Brent would secure at least a near-term bottom for oil, before the next big unknown!

Comfort DelGro

After breeching its previous 52-week high of $2.75 in late January, Comfort DelGro has led the charge amongst Singapore transport plays. The stock gained 5% again yesterday to close at $3.09. At this level, the stock is priced at a PER of 22x, well above its historical average of 16x. The company’s 75%-owned SBS Transit reported a strong set of numbers yesterday after close of trading. Revenue for the full year increased by 12%, allowing the local bus and rail operator to register an earnings improvement of 27.8%. SBS saw gains coming from increased ridership on their buses and trains with higher average fares. SBS stock closed stronger yesterday, up 4% before the numbers were out. Comfort will offer colour on their overseas operations when they report after the market close today. Unless they surprise the market with a solid report from their foreign businesses, or continue to show significant improvement in margins due to lighter fuel costs, upside for the stock at these levels remains limited to the $3.20 levels. Comparatively, both SIA and SMRT offer traders better upside potential in terms of both current valuations being lower, with superior expected future earnings. In particular, SIA looks interesting here after its recent post earnings sell down.

Earnings Alert: OCBC

OCBC reported earnings this morning. Q4 14 earnings rose 11% year-on-year to $791 million due largely to higher interest income, fee and commission income and profits from life assurance. Numbers however missed analysts’ estimates due to larger-than-expected allowances for troubled loans. Allowances for doubtful debt more than doubled in the Q4 14 versus Q4 13, and it increased 60% versus Q3 14.
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