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

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