Crude

Crude had another big move overnight, trading up by as much as 6% for WTI. The unwinding of crude stocks in US inventory, as refiners have started to progressively operate again post-industrial action and maintenance shutdowns, has added cheer for oil bulls to bid the commodity up. Consequently, gasoline prices eased back as suppliers increased stock in preparation for the typically busy US summer driving season. Also in support of a firmer price for crude are reports that Saudi Arabia has raised prices for all crude oil grades it will sell to buyers in Asia from May. This is the second consecutive month that the Saudis have raised prices in Asia.

Aussie dollar

Among most of the key USD pairs, the AUD/USD ‘recovery’ has proven to be the weakest, barely bouncing off the 0.76 level low. This has come despite an almost 2-3% pullback in the dollar Index with the eurodollar faring rather well, up almost 4% from its low in March. Looking at the chart below, a key reason for the sell down highlighted an iron ore-related decline. At this level of 0.76, the Aussie looks vulnerable for a significant move. If 0.76 fails to hold, we may see it test 0.745 and even 0.73. If 0.76 holds, however, we may see a bounce to test its first resistance of 0.775, and subsequently 0.79. The key as always remains what will trigger this move. Today key Australian data in the form of Retail Sales at 9.30 am (local Singapore time ) and the RBA rate decision at 12.30pm may offer such a catalyst for this move.

Singapore Property

With most key markets in the region still closed for holidays, local stocks on the SGX traded directionless for most of yesterday, hovering mostly near the flat line throughout. Local property names on the SGX, however, stood out as traders in attendance continued to chase the privatisation story. Speculation has been rife, especially after a series of privatisation over the last few years, beginning with SG Global, Hotel Properties and lately Keppel Land. Candidates in play include mainly second-tier names, including Wing Tai, Ho Bee and Wheelock Properties who were up by almost 10%, 4% and 3% respectively. With some of these stocks trading at deep discounts to book, there is speculation that major shareholders may come in to take these names private, or be faced with potential penalties for unsold stock under the QC rule.

SGX March numbers

The Singapore Exchange (SGX) saw strong growth in trading volumes and market activity across both securities and derivatives in March. Trading in the stock market grew by 5% in total volume while derivatives trading volume grew by 56% on a year-on-year basis. While the growth registered in securities trading was modestly steady, the increase reported for derivatives traded in March was rather impressive. Key contributions for this increase in derivatives came from two main contracts, namely the FTSE China A50 Index futures - which more than doubled year on year in volume - and the SGX Iron Ore 62 % futures, which saw a fourfold year-on-year improvement. On closer look, the FTSE China A50 Index futures dominate as much as 50% of the total volume of derivative contracts traded on the SGX. This tipping of the balance puts the business in a slightly vulnerable situation, especially when rumours are circulating in the market place that the HKEx themselves are considering their own China A50 Index Futures product. SGX’s shares have been a strong performer in the market. At a current TTM PE of 27X, the stock could see selling pressure, especially if the rumours above turn out to be true.
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