Singapore’s market had one of its best trading sessions yesterday emboldened by Temasek’s partial offer to acquire an additional 35% stake in Keppel Corp.

The offer price of $7.35 apiece marks a 25.8% premium over its last traded price of $5.84.

It suggests Singapore blue chips are generally undervalued at their current market price and that there is long term value within them. Other quasi state-owned companies such as SingTel, SembCorp Ind and Sembcorp Mar have all seen their share prices move higher yesterday. There is also speculation that Singapore may move a step closer to consolidate its offshore & marine industry via M&A activities. 

The Straits Times Index opened higher today, with Keppel Corp opening 14% higher at S$ 6.66. Its current trading price marks a 10% discount to the offer price, reflecting uncertainties in closing this deal. Each of the pre-conditions including gaining regulatory approval, Keppel Corp’s financial performance and a majority approval by Keppel’s shareholders, needs to be satisfied by 21st October 2020, in order for the offer to be made.

Asian markets are set to open broadly higher as the risks seem to have cleared or at least postponed for both Brexit and US-China trade talks. President Trump said last night that he is very close to signing a phase one deal with Chinese leaders in November. Trade optimism fuelled a stock market rally and hopes of a Fed rate cut led a decline in the US dollar.

The offshore yuan strengthened against the greenback to 7.066 area this morning, signalling a ‘greenlight’ to risk assets.

Keppel Corp

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

CMC Markets Singapore may provide or make available research analysis or reports prepared or issued by entities within the CMC Markets group of companies, located and regulated under the laws in a foreign jurisdictions, in accordance with regulation 32C of the Financial Advisers Regulations. Where such information is issued or promulgated to a person who is not an accredited investor, expert investor or institutional investor, CMC Markets Singapore accepts legal responsibility for the contents of the analysis or report, to the extent required by law. Recipients of such information who are resident in Singapore may contact CMC Markets Singapore on 1800 559 6000 for any matters arising from or in connection with the information.