SIA crash likely to dominate trade<\/p>\n
SINGAPORE (Reuters): The crash of a Singapore Airlines jet in
\nTaiwan is likely to dominate trading early this week after the
\ncompany accepted full responsibility.<\/p>\n
SIA fell 5.71 percent to S$16.50 on Friday, topping the
\nlosers' list, after a Taiwan prosecutor said the Boeing 747-400,
\ncarrying 179 passengers and crew, tried to take off from the
\nwrong runway.<\/p>\n
SIA later accepted full responsibility for the crash, which
\nkilled 81 people, saying it was pilot error that led to the first
\nfatal accident in the airline's 28-year history.<\/p>\n
The stock was expected to come under renewed pressure after
\nthe offer of $400,000 in compensation to victims' families.<\/p>\n
SIA's prompt and larger-than-expected payout -- more than five
\ntimes the compensation as stipulated under the Warsaw Convention
\n-- leaves open the question of liability.<\/p>\n
Analysts have said SIA could face personal and property damage
\nliability of more than $130 million but that it was adequately
\ninsured for the aircraft and its contents.<\/p>\n
Dealers said SIA shares could next test S$15.90, a previous
\nsupport, where the airline had actively bought back its shares.<\/p>\n
The Straits Times Index ended 1.03 percent or 21.07 points
\nhigher at 2,061.50 on Friday, and rose over five percent on the
\nweek, mainly on a jump in NatSteel Ltd.<\/p>\n
Buying momentum in the electronics sector was also expected to
\ncontinue after Nasdaq rose 5.3 percent in the week to Friday,
\nclosing at 3,451.58 points.<\/p>\n
Analysts said talk of company restructurings could lead
\ninvestors to focus on bank and tech stocks after NatSteel Ltd
\nsold its electronics assets at a huge premium.<\/p>\n
NatSteel was set to pocket S$1.0 billion in extraordinary
\ngains after it sold its 33 percent stake in NatSteel Electronics
\nto U.S. electronics manufacturer Solectron Corp.<\/p>\n
\"The market is thinking who would be next. Obvious candidates
\ninclude PCI, Omni Industries and NatSteel Broadway,\" said
\nTheodore Teo of Prudential-Bache Securities in Hong Kong.<\/p>\n
Teo said if NEL, Asia's largest electronics contract
\nmanufacturer, could not remain independent, it would be difficult
\nfor smaller companies to do so.<\/p>\n
Kam Yoke Meng, a senior fund manager at OCBC Asset Management,
\nsaid banks could also return to investors' radar screens with
\ntheir attractive valuations and hidden values.<\/p>\n
\"Restructuring in the banking sector is still on. It can be a
\nmerger or disposal of non-banking assets which may unlock more
\nshareholder value,\" Kam said.<\/p>\n
The Monetary Authority of Singapore in June gave banks three
\nyears to divest non-banking assets and to focus on the business
\nof banking.<\/p>\n
Overseas Union Bank is likely to extend its rally after
\nconfirming over the weekend it was in preliminary talks to sell a
\nminority stake in the bank.<\/p>\n
OUB jumped more than 12 percent late on Friday to close at a
\nhigh of S$9.50 on market speculation of a restructuring and a
\npossible takeover of the bank at S$10 per share, brokers said.<\/p>\n
United Overseas Bank could come under some pressure after its
\ninvestment arm, UOB Asia, was charged in court for allegedly
\nmisleading the public by creating an impression of high demands
\nfor two recent initial public offers.<\/p>\n
Leng Seng Choon, banking analyst of Kay Hian, said Singapore
\nbanks had over S$6.0 billion in value surpluses which had not
\nbeen realized, with over S$3.0 billion alone in OCBC.<\/p>\n
In terms of valuation, analysts said bank stocks were not
\nexpensive at their current levels and traded at below historical
\naverage of more than two times their book value.<\/p>",
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