Oil and gas speculation continues

Speculative activity continued in the oil and gas exploration and support services space on the Singapore Exchange (SGX) as crude oil prices surged to a more than two-year high.

This is even as the benchmark Straits Times Index (STI) experienced a mostly flattish day, closing almost unchanged at 3,374.08 points, down just 1.89 points or 0.06 per cent. Gainers outnumbered losers 231 to 216.

Brent crude stayed above the US$60 a barrel mark for the second day in a row as officials from Opec (Organization of the Petroleum Exporting Countries) and Russia pushed for production cuts to be extended until the end of next year.

Watchlisted explorer Mirach Energy rose 23 per cent to $0.092, offshore support vessel provider Vallianz Holdings rose 21 per cent to $0.017, explorer RH Petrogas was up 14 per cent to $0.065, and services provider Pacific Radiance was up 12 per cent to $0.128, to name some of the top percentage gainers.

Yangzijiang Shipping was up 2.9 per cent to $1.575, nearing an end-August high of $1.625.

In non-oil and gas related news, electronics and semi-conductor-linked manufacturing stocks continue to climb.

Contract manufacturer Venture Corp continued its remarkable ascent, adding 59 Singapore cents or 3.1 per cent to $19.49 on 1.2 million shares traded.

AEM added 5 per cent to $3.13, Hi-P added 4.8 per cent to $1.87, and Micro-Mechanics, up 3.9 per cent to $2.11.

Latest numbers from the tech-centric economy of Taiwan also boosted sentiment. Taiwan grew at 3.1 per cent year-on-year, an unexpectedly strong result thanks to export growth of 11.2 per cent.

Powering the economy in the near-term could be the new iPhone X, due on Nov 3, with Apple saying that pre-orders were "off the charts".

Blue chip wise, Hutchison Port Holdings Trust fell half a US cent to US$0.43 on more than 32 million shares traded after what DBS analyst Paul Yong said was a disappointing set of third-quarter results.

The trust operates terminals in Hong Kong and China. Despite double-digit percentage increases in container throughput year-on-year, the trust gave more concessions to certain liners and revised some tariffs, causing average revenue per TEU (twenty-foot equivalent unit) to fall.

The trust is fairly valued given its current prospective yield of 5.8 per cent as the group is guiding for 2017 DPU to be at the lower range of 20-22 Hong Kong cents, said Mr Yong.

"We expect DPU for 2018 to stay flat from 2017 as group profitability remains under pressure, with returns on equity projected to be at just 3 per cent."

Mr Yong maintained his "hold" call with a target price of US$0.39, lowered from US$0.42.

Taking a different view was OCBC analyst Deborah Ong, who upgraded the trust to a "hold" with an unchanged target price of US$0.42.

"Looking forward to 2018, the management expects a much milder decline in (prices) and low single-digit throughput growth," she said.

Back to the pennies, a noticeable spike in trading came from Henan-based chemical manufacturer Jiutian Chemical.

The counter rose 11.5 per cent to $0.058 on more than 85 million shares traded, and is now up 45 per cent from $0.04 just a week ago. Over 400 million shares have transacted in the last five trading days, or more than a third of its free float, according to Bloomberg.

Loss-making luxury retailer FJ Benjamin spiked 29 per cent to $0.058. Chief executive Nash Benjamin said in an interview published in The Business Times on Monday that numbers are "ahead of our projections" and he is more confident of returning to profitability.

This article appears in The Business Times today. For full listings of SGX prices, go to http://btd.sg/BTmkts