STI set for higher open following minor setback

The index surprised traders, says IG markets Singapore, as it fell while its regional peers rose.

OCBC Investment Research said:

The third consecutive session of gains on Wall Street overnight and the strong Nikkei start (up 1.3% now) are likely to inspire the local bourse to a further recovery this morning.

Following the strong showing on Monday, the STI continued to hold its ground relatively well with just a 0.1% mild correction yesterday.

And with the upside momentum likely to resume today, we could see the index climbing in the direction of the 3100 immediate resistance (upper limit of gap resistance).

Beyond that, the subsequent obstacle lies at the 3140-3172 gap resistance. On the downside, the immediate support can be found at the 3056-3069 gap support, followed by the next base at the 2980 recent troughs.

IG Markets Singapore meanwhile noted:

The STI surprised traders yesterday falling while its regional peers rose. After a minor setback it looks set to open higher this morning based on the futures market.

The local market will be buzzing after Kindest Place, a Thai company linked to ThaiBev, made a surprise offer last night of $55 a share for F&N’s direct 7.3% stake in APB.

It’s hard to know if the Thais are simply trying to scupper the Heineken bid or if they have intentions to gain full control of APB. That’s assuming they can afford it without securing more bank loans.

Whatever their motivation, it will cause a hangover for Heineken who will now have to decide if it will better the $55 a share offer.

OCBC may be kicking itself having agreed to sell its stake in APB to ThaiBev for just $45 a share. There’s a possibility that the final APB price may be pushed up to $60 a share, depending on how keen Heineken is in expanding its Asian footprint. The Dutch brewing giant is already paying 17 times earnings for APB.

Sembcorp Marine has announced a $4 billion contract to build five drill ships, highlighting its expertise in the oil and gas sector and acting as another example of the world-class companies included within the STI.